I was curious how most small caterers kept tract of their finances. I'm planning on netting no more than $10,000 this year, so I wasn't sure if an accountant was necessary at this point. What do you think?
Accountant vs. quickbooks (or something like that)
Running a small business there are so many facets and one thing that can distract you from your main goal is tracking your spending. As a small business owner I track everything in Quicken and I work with an accountant at the end of the year for tax purposes. For payroll I use a payroll service and the cost of the payroll service is worth not having the headache of filing all the paperwork for state payroll. If you an afford an accountant I would go with that. Often they will give smaller businesses a break on price.
I have never owned a catering business (although I work for one), but I was a restaurant owner. I did my own books including payroll, but I did use an accountant for year end taxes.
I did my own books for two reasons. The first being the more obvious one of saving me money. The second being that it forced me to be more cognizant on a daily basis of exactly where and how my money was being utilized. It forced me into staying a hands on owner.
If you asked me my food cost, I could immediately tell you. Labor cost, the same. Etc. I have worked for owners that couldn't tell you without having to look it up or ask the accountant.
The most successful owners that I have worked for in the past and present are those that are hands on. The less hands on they have been, the more bleeding of money I have observed. In cases where the owner is oblivious to the daily minutiae, the bleeding is closer to a hemorrhage.
In baseball, the pitcher on the mound has more impact on the outcome of the game than the reliever sitting in the bullpen or the fan sitting at the top row of the stadium.
That's my story and I'm sticking to it! :~)
I used Quickbooks for our 40 seat restaurant. It can track all expenses as long as you input them and the program does payroll as well.
We tried several payroll services but they always wanted us to figure the hours first, then tell them what they were. Thanks to software like quickbooks, figuring the hours is the only effort. Input the time card info and the system does the rest. Once I understood how it worked, payroll took about 45 minutes for eight employees. Signing up for the online connection meant all tax updates happened and any errors became the responsibility of Quickbooks.
I don't remember exactly how much the whole thing cost. So much for the initial program, so much for the online service and of course they expect you to update every couple of years for another price. It may have been the same paying for a service but I never got around to comparing the numbers.
What I did enjoy (kind of) was knowing precisely how much payroll was costing and for what. At the end of the year the program developed an "accountant's copy" you could download to hand over to the accountant for year end taxes.
While I never got around to taking full advantage of it, I also appreciated the expense recording. If you input all expenses, the software keeps track of all of it and can generate multiple reports of all kinds. A friend called this record keeping the "general ledger" but he did it the old fashioned way with pencil and paper. Taking the time to input the expenses while paying the bills makes the process much easier and reduces errors.
I never used Quicken or any other software but I imagine they are all similar and using one is much better than not using one. As has been pointed out already but can not be overstated is that tracking ALL expenses is vital. It can be a bad surprise to find out how much money you are losing over what you thought were inconsequential issues.
We used a linen service for towels, aprons and cook shirts. When taking a closer look, I discovered the numbers of items dropped off and the numbers charged for were not always accurate, nor was anyone in the linen company keeping that close an eye on it. I switched to buying black T-shirts and chef coats, dropped the rented ones and began counting the towels and aprons upon arrival. The linen company quickly got the message and began a better tracking system. And of course our expense went down considerably for linen.
We rented a dumpster for awhile. After reviewing what was actually going in the dumpster and how much space was actually needed for the garbage we produced, we changed to two large wheeled cans and setting the cardboard to the side. That lowered the disposal bill by quite a bit.
You should absolutely have a restaurant qualified accountant to help you. Not so much to do it for you but for the financial knowledge they can share. They should know about tax breaks for purchases and expenses, depreciation of equipment and other expenses, how to set up your record keeping and a lot more. They can also tell you how to pay yourself. That may sound funny but too many small business owners don't think of their efforts as justifiable expense and go far too long without addressing the issue. You need to be paid and your pay needs to be recorded as a business expense in order to have a true picture of your business's feasibility.