In: Accounting
Your Restaurant Business Discussion
Part 1: Opening Your Own Business
You are considering starting your own restaurant. What are the types of business organizations can you choose from? Which one would you choose, and what benefits and disadvantages would that form offer you?
Part 2: Accounting for Your Own Business
Throughout the course, you will be working on your own fictitious business—a new restaurant! In Part 1 of this discussion, you chose how you would like to structure your business: a sole proprietorship, a partnership, or a corporation. Now, let’s assume you have been in business for a short time. Your staff is busy cooking, waiting tables, and making your customers happy. You’ll need to record all of the transactions in order to keep an accurate record of how well your restaurant is performing. This important task can certainly be done by hand, but there are also a lot of great software programs that can help make the task easier. Even small businesses can benefit from accounting/financial software. Research the business software QuickBooks. In your initial post, explain what QuickBooks is and how you feel it could help improve your ability to track and record transactions in your new restaurant.
Part A
Types of Business organisation or structure for Restaurant business is as below
Sole Proprietorship : One can set up its business as sole proprietor which means that all the property, equipment and other assets are owned by one person and this person is also liable for all the debts and expense of the busines. The major disadvantage of this form of business structure is that the owner and business is considered as single legal entity, which means owner is legally liable for any infraction that might occur.
Partnership : There are two types of partneship
General Partnership : It is same as sole proprietorship but with more than one person.
Limited Partnership : Here, there is a general partner who manages the business and has unlimited legal and financial responsibility for the business, while the limited patner is only responsible to the extent that they invest.
Limited Liability Company(LLC) : It is basically a hybrid form as it combines the liability protection of corporation with a tax treatment and ease of administration of Partnership. Filing business as LLC gives business a seperate legal status.
Corporations : The advantage of setting a business as corporation is it gives business a seperate legal status, which implies that when business goes into debt then members are only liable to the extent of their investment. There are two types of Corporation and what distints them is the way the pay taxes
C Corporation: Here there are seperate taxable entities. They file both Corporate Tax Returns, pay taxes at corporate level and pay taxes on corporate income taxes,if income is received by owners as dividend.
S Corporation : They file a federal tax return. However, they dont pay income tax on corporate level. Profit and losses are paid through owner's personal tax return.
In my opinion for a restuarant, LLC is the appropriate form of business structure as it protects you from personal liability.
Unlike with sole proprietorships and partnerships, only the amount of money you put into an LLC is at risk.
If you plan to open up a chain of restaurants, set up a separate LLC for each location. That way, in the event of a lawsuit, only an individual restaurant's assets are at risk.
Corporations limit your personal liability too, but LLCs have additional merits. For starters, LLCs are simpler and more flexible. Unlike both types of corporations, LLCs don't require a board of directors, shareholder meetings and other managerial formalities.
Better yet, LLCs allow entrepreneurs to divvy up profits any way they choose, as opposed to shareholders in corporations, who have to carve them up in proportion to their percentage ownership in the company. With an LLC structure, restaurateurs can entice investors or employees with a share of the profits--even if those people didn't pony up their own equity in the beginning.
Another advantage with LLCs: tax-treatment flexibility. An LLC's profits can be taxed as a corporate entity (a C corporation) or as a "pass through" entity (an S corporation), meaning that the company avoids paying tax on both corporate profits and the owners' personal income. Most LLCs choose the pass-through option. However, in some cases, LLCs can choose a C corporation tax structure and save money by funneling profits back into the business tax-free.
One minor downside to LLCs (and S corporations): You can't take them public. Even if you plan to launch the next Smith & Wollensky , it's much simpler to set it up as an LLC and switch to a C corporation when you get closer to listing on the Nasdaq.
Part B
QuickBooks is an accounting software package developed and marketed by Intuit. QuickBooks products are geared mainly toward small and medium-sized businesses and offer on-premises accounting applications as well as cloud-based versions, that accept business payments, manage and pay bills, and payroll functions.
QuickBooks helps restaurant operators effectively manage their accounting and financial information from one central location. In today's fast-paced environment, restaurant operators need accurate and up-to-date financial data so that they can better serve customers and improve the restaurant's profitability. QuickBooks is easy to use, easy to setup, and easily customizable accordingly.
QuickBooks makes it easy to accurately track each dollar coming into and going out of the restaurant so that one always know where the business stands. We could track all of our financial activity, including daily sales totals, vendor payments, and more from one central location. QuickBooks does all the calculations, such as totaling expenses and revenue, and calculating income. In a few clicks one can create customized reports, track gift certificates sold and redeemed, forecast sales and expenses, and much more. QuickBooks makes restaurant accounting easy.
QuickBooks helps restaurant operators make better business decisions
QuickBooks makes it easy to collect and report accurate financial data so that restaurant operators can analyze performance and adjust the business to the ever-changing marketplace. Because restaurants make daily decisions about menu items and food costs, QuickBooks puts the information they need to make better business decisions at their fingertips.
QuickBooks comes pre-loaded with over 100 financial and accounting reports. It's easy to report sales, expenses, and net profit or loss. Schedule reports to be automatically generated and emailed to us so that one always have the information it need. Many restaurant managers review food costs daily so that they can better control their perishable inventory, and they set these reports to be created and emailed to them automatically. QuickBooks makes it easy to run reports in seconds for better decision-making.