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Running a pub or restaurant can be a rewarding business but it demands huge commitment, especially at peak times like Christmas and New Year. It can be a challenge for pub landlords or restaurant owners to keep diligent records at busy periods like these, but it's important not to neglect administrative tasks - especially with the Self Assessment tax deadline approaching on 31 January 2019.
Once you've set up a reliable system, keeping books up to date shouldn't seem such a daunting process. To help keep your accounts on track, we've highlighted eight key tips below:
1. Booking live entertainment? Keep invoices or issue a receipt. If you're booking a local band or entertainer, payment is often made in cash because the act may not be set up to send invoices. If this is the case, ensure you issue a receipt which must be signed to acknowledge the fee. Keep a copy of the signed receipt to provide a clear audit trail for your outgoings.
2. Cash takings must also be carefully recorded, with separate sales codes for different types of transaction. When you have an accurate cash book, it will be much easier to reconcile till rolls with cash takings.
3. Separate out 'dry' and 'wet' sales. Accounting will be clearer if you ensure that tills are set up to differentiate between food and drink. It's easier to keep an eye on gross profits and margins when different income streams are clearly coded.
4. Remember to factor in any other forms of income, for example from fruit machines, vending machines in toilets, or bookings for overnight guest rooms.
5. Ensure all employees are on the payroll. There may be times when you decide to employ casual staff, but even temporary bar or waiting staff must go through a payroll scheme, with tax and National Insurance contributions deducted in the usual way. As with our first point regarding live entertainment, if you pay cash to casual workers, ask them to sign a receipt and keep a copy.
6. Tips are taxable earnings and in most instances the best way to account for them is through a tronc system. This is a separate payroll scheme which takes into account the value of tips collected, how the money should be distributed to employees, and what income tax should be paid. Bear in mind that earnings from tips do not count towards the national minimum wage.
7. Careful stock control is essential. Margins can be slim in this industry, so you need to know exactly what's selling well and where changes might need to be made. Remember to file away any credit notes for breakages or short deliveries.
8. Be very clear about the split between private and business expenses. This is especially relevant if you live on the premises. Expenses such as food and utilities will need to be included in your private, not company, accounts.
Follow these good habits and you'll soon find that record-keeping becomes just another part of your everyday routine.
Here at AMR, we have many years' expertise working with clients in the hospitality sector in London, Kent and across the South East. We can advise on the best software for your business, including software that will meet HMRC's new rules on digital submission for VAT returns. These come into force from April 2019 – you can find out more in our recent Making Tax Digital blog.
For more information, Contact AMR today and one of our friendly team will be happy to discuss your requirements.