How should a small restaurant set up its bookkeeping system from scratch?

To set up bookkeeping from scratch in a small restaurant, you need a simple structure that captures every sale, every cost, and every payment in a consistent way. Start with a clean chart of accounts, lock down how daily sales are recorded, and build a weekly and monthly routine so nothing slips.

A good restaurant bookkeeping system isn’t complicated—it’s disciplined. The goal is to see cash flow clearly, spot cost issues early, and make taxes and payroll predictable instead of stressful.

Direct answer

How should a small restaurant set up its bookkeeping system from scratch? Set it up around three daily truths: what you sold, what you spent, and what you owe. Use a basic chart of accounts built for restaurants, record sales and payment types every day, and reconcile bank and card deposits regularly so your books match reality.

Start with the minimum structure

If you build the foundation correctly, the rest becomes routine. In most restaurants, the initial setup focuses on consistent categories, a clean paper trail, and a predictable schedule.

1) Choose your bookkeeping method and who owns it

Decide early whether you’ll use cash basis or accrual basis accounting, and who is responsible day-to-day (owner, manager, bookkeeper, or an accountant supervising a bookkeeper). Many small restaurants begin with cash basis for simplicity, then move to accrual as they grow, add catering, or manage larger inventory.

2) Create a restaurant-friendly chart of accounts

Your chart of accounts is simply the list of categories you’ll use for income, costs, and expenses. Keep it detailed enough to manage, but not so detailed that nobody uses it consistently.

Sales: dine-in food, dine-in beverage, takeout/delivery, catering/events, service charges
Cost of Goods Sold (COGS): food purchases, beverage purchases, packaging/consumables
Labor: wages, payroll taxes, benefits, contractor labor
Occupancy: rent, utilities, repairs and maintenance
Operating: cleaning supplies, smallwares, laundry, pest control, software, phone/internet
Marketing: promotions, printing, social media spend
Fees: card processing, delivery platform fees, bank fees
Taxes: sales/VAT/GST (payable), payroll tax liabilities

Commonly used practice: separate food and beverage sales and COGS from day one. It makes cost control and menu decisions far easier later.

3) Open the right bank and payment accounts

Keep restaurant finances separate from personal finances. Use one primary business bank account, and keep payment processor settlements (cards, QR pay, delivery payouts) traceable. If you mix accounts, your bookkeeping becomes guesswork.

Set up your daily sales workflow

Most bookkeeping problems in restaurants start at the register, not in accounting software. Your daily close process should produce a consistent “sales package” you can file and reconcile later.

What to capture every day

Total sales by category (food, beverage, takeout/delivery, etc.)
Sales tax/VAT collected
Payment breakdown (cash, card, gift cards, house accounts, delivery payouts)
Discounts, voids, comps (with a short reason)
Tips collected and tips paid out

Real-world example: If your POS shows 10,000 in card sales today but the bank deposit is 9,650, the difference is usually processing fees, tips, refunds, or timing. If you don’t capture those details daily, you’ll spend hours later trying to explain it.

Build a simple weekly and monthly routine

Bookkeeping stays clean when you don’t let it pile up. A short weekly rhythm is widely applied in small restaurants because it keeps cash flow and costs visible.

Weekly checklist (typical in most restaurants)

Reconcile bank transactions and card settlements
Enter and categorize vendor bills and receipts
Review prime costs: COGS + labor as a quick health check
Track outstanding bills (who you owe and when)
File payroll reports and confirm tips were handled correctly

Monthly checklist

Close the month: confirm sales, taxes, payroll, and major expenses are complete
Review P&L with a restaurant lens (sales mix, COGS, labor, fees, occupancy)
Check inventory counts or at least validate key purchases versus sales
Set aside tax amounts based on your actual liabilities
Compare this month to last month and to your budget

Track inventory and purchases in a practical way

You don’t need a complicated inventory system on day one, but you do need a repeatable approach. Most small restaurants start by tracking key products and running a consistent weekly count on high-value items.

Real-world example: A café might count coffee beans, milk, pastries, and bottled drinks weekly. A bar might count spirits, wine, and draft keg changes. The goal is to catch shrinkage, over-ordering, or portion issues early.

Handle tips, staff meals, comps, and discounts correctly

These are common areas where books drift away from reality. Set clear internal rules and record them the same way every time.

Tips: separate tips from sales; confirm payout method and timing
Staff meals: track as a policy (discounted meal, free meal, or controlled comp)
Comps and discounts: record the reason and category so it can be reviewed
Gift cards: treat as a liability until redeemed

How digital menus or management systems can support the process

Bookkeeping is easier when your menu and item structure are consistent across channels. A digital menu and management system can support bookkeeping indirectly by reducing item confusion, keeping pricing and availability aligned, and making sales categories easier to maintain across dine-in and online ordering links.

For example, if you manage menu items centrally (including options and availability) you reduce “misc” items and manual price overrides that often create messy sales reports. Platforms like Menuviel can help keep menus and item naming consistent, which makes POS reporting and bookkeeping categorization cleaner over time.

Quick setup roadmap (from scratch to routine)

Week 1: set chart of accounts, separate bank accounts, define daily close package
Week 2: start weekly reconciliation, organize receipts and vendor bills
Week 3: standardize sales categories, tips handling, and comp/discount rules
Week 4: run a full monthly close and review your first clean P&L