Creating a Chart of Accounts for a Small Restaurant

Independent restaurant owners often do their own bookkeeping. Even if they hire a professional accountant at year’s end, they may save considerable money by handling the weekly tasks themselves.

Setting up a chart of accounts to fit the restaurant needs generally requires customizing the default choices of any accounting program. The selection of sales and cost of goods accounts on most systems does not provide for the separation of food and beverage categories that are needed.

Even the leading bookkeeping program for small business, while it has a default selection for restaurants, fails to provide all of the accounts that most restaurant owners require. In addition, many of the expense accounts that are added are rarely used, leading to confusion during data entry, and don’t help with the overview of the business finances.

The National Restaurant Association publishes a book titled Uniform System of Accounts for Restaurants. The book provides detailed descriptions of the application of generally accepted accounting principles to the restaurant industry.

That book includes a sample chart of accounts, but notes that “the codes used here are not the only method for classifying the accounts”. It points out that most restaurants will not use all of the categories listed, and it also notably lacks breakdown of inventory and cost categories beyond “food” and “beverage”. Many restaurant owners want further separation of those categories to include sub-categories such as “meat”, “seafood”, and “produce”, and possibly “beer” and “wine” for beverage categories.

While many programs do not require the use of account numbers, the NRA book states that some type of account numbering system must be used. If your program is not showing account numbers, it should have an option on a set up screen to activate that feature.

Any account numbering system is generally grouped so that accounts of a particular type fall within a specific range of numbers. For example, assets may be in the 1000 range, and income accounts in the 4000 range. On systems with many detail accounts, 5 digit numbers may be used to allow more sub-categories, but that is rarely needed for a small restaurant.