Ep #56: The Restaurant Year End Financial Checklist

Now, number one, of course, is to make sure that all of your accounts are accounted for within your accounting software, even if that's Excel, which I really hope it's not by now.

Um, but whatever accounting software you're using, all of the accounts that have touched your business should be on your balance sheet, and all of the activity within those accounts need to be in your books, which of course, if it's on your balance sheet, the activity has to be on your books and done correctly.

So what I mean by that, uh, one of the... well, I mean a lot by that, but one of the first things I'm thinking about is if you have any loans, whether it's a Toast loan, a third party, uh, the merchant cash advance loans, traditional loans, lines of credit, whatever loan you have that you took out for your business on behalf of your business, whatnot, that loan needs to be on your balance sheet, right? It's a liability.

It's something you owe.

And then the activity, the money that you took in, um, and the interest that you're paying, any fees, statement fees, annual fees, monthly interest, whatever, should also be accounted for 'cause you get the write-off for the fees of those.

You certainly don't get to write off the payments you make back, but you get to write off the fees.

You want all of that to be accurately recorded on your books and reconciled.

Reconciled is actually an action.

It's a thing that happens.

It's not just a term that you use.

I mean, it's a common thing that people can say, "Oh, have you...

I haven't reconciled that with my memory" or something.

Like, like it's, it's, you know, I get that.

It's like a verb you can use.

But in accounting world, it's an actually thing that you do.

And in QuickBooks, for example, and in any other accounting software that I've ever worked in, so I'm as- assuming they all have this, it is a button, a reconcile button that you push, and then it brings you into a reconciliation screen where you there have to check off all of the transactions that are actually on that bank statement or credit card statement or loan statement that needs to match what's in your accounting software, and you literally check them off until the balance is zero.

The balance becomes zero is because you start with beginning balance, which QuickBooks will give to you if you've already had this account on your file, right? So your beginning balance, you enter in the ending balance, which is printed on the PDF statement that you get, and then you check off everything that actually happened within that account, and then that will come to zero if you've done it right.

And that is, and then you hit complete reconciliation, and then this big green R, you know, depends what you're in, but like an R will show, meaning that that account has been reconciled, which is important.

It means, it actually kind of means everything when it comes to accounting because when you hit that reconcile now and you get that R on that account, it means, "Hey, this account is legit.

Everything in here is correct." Presumably.

Now, let me, let me just have a little caveat there.

We have seen some people who still hit reconcile even though there are transactions that are, are appearing on the screen, let's say the reconciliation window, that they did not check off because they weren't actually on the statement and they didn't know what to do with it, and that is wrong.

And so if that's ever the case, and I know I'm getting a little bit in the weeds here, so I'm gonna back out of the weeds in just a second.

But when you go to reconcile, and if you, if you're jiving with me right now and you know that window comes up, and then on the left side usually are all your, your charges, your expenses, your checks, your ACH, whatever on the left side, and all your deposits, any type of deposits on the right side Um, if there's anything in that window that you don't get to check off because you don't actually see it on the statement, and if you checked it off, you'd be out of balance, that shouldn't be there, and you need to investigate that because it's wrong.

And not only is it wrong, it means that there's activity happening within your books that's not correct.