Prime cost weekly (COGS + labor), tip pooling and FICA tip credit done right, and POS-to-GL reconciliation that ties to the penny — for independents and small groups running 1 to 4 locations.
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Restaurant bookkeeping is a daily, not monthly, discipline. The single metric that separates restaurants that survive from restaurants that close is prime cost (food + beverage COGS + total labor including taxes and benefits) as a percentage of sales — the rule of thumb is 60-65% for full-service and 55-60% for QSR. Anything above 70% is a death spiral. Generalist bookkeepers run monthly closes, by which time you have ordered 4 more weeks of food at the wrong mix. We close weekly, track COGS by category (food, beer, wine, liquor, NA bev) so you can see whether the bar program is subsidizing the kitchen or vice versa, and reconcile Toast / Square / Clover / TouchBistro daily-batch reports to the bank deposits to the penny. Tip handling is the other landmine: tip pooling rules vary by state (mandatory pool prohibited in some states for non-tipped employees), FLSA tip credit lets you pay $2.13/hr federal minimum but only with proper notice and topping-up, and Form 8846 lets you claim a credit equal to the employer FICA paid on tips above minimum wage — typically $3k-$15k/yr per location. Most independents never claim it. Restaurant365 has a great platform but charges $469+/mo just for software; we run on R365, MarginEdge, or QBO with custom restaurant chart of accounts at $495/mo all-in.
These are the niche-specific issues a generic $200/mo bookkeeper either misses or charges extra for.
Daily Toast/Square deposits net out card fees, tips paid out, and chargebacks — posting the net hides 3-5% of gross sales and breaks prime-cost math
FICA tip credit (Form 8846) returns 7.65% of tips above minimum wage to the employer as a tax credit — typical independent leaves $5k-$15k/yr on the table by not claiming it
Prime cost calculation requires food, bev, and labor (including employer payroll tax and benefits) bucketed weekly — a monthly close means you find out about a 4-point margin compression a month too late
Tip pooling and tip-credit compliance varies by state; FLSA 80/20 rule restricts tip-credit on non-tipped work over 20% of hours — getting this wrong is a DOL audit
Restaurant365 dominates with software ($469+/mo just for the platform, bookkeeping extra) and most generalist firms post the daily Toast/Square deposit as one revenue line, destroying prime-cost visibility. Xendoo and Bookkeeper360 treat restaurants as a generic "service business" and never touch the FICA tip credit on Form 8846 — leaving 7.65% of reported tip income on the table.
| Provider | Monthly | Focus | Notes |
|---|---|---|---|
| Best-in-class restaurant ERP + add-on accounting | |||
| Generalist online business bookkeeping | |||
| Marketplace of fractional bookkeepers | |||
| Weekly prime cost, FICA tip credit prep, POS-to-GL daily recon, CGMA-supervised |
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Prime cost = food and beverage COGS + total labor (wages + employer payroll tax + benefits + tip-share employer cost) divided by net sales for the same period. We pull POS sales weekly, post weekly vendor invoices to food/bev categories, calculate ending inventory off a Monday-morning count for high-velocity items (proteins, top-shelf liquor), and produce a weekly prime-cost percentage with a 4-week trailing trend. Independents who target sub-65% and review weekly catch margin slippage in week 1 — monthly-close operators find out in week 5.
Under the 2018 FLSA amendment, mandatory tip pools that include back-of-house (cooks, dishwashers) are permitted ONLY if the employer pays all tipped employees at least the full federal minimum wage ($7.25/hr) — you cannot take the $5.12 tip credit and also pool tips with BOH. Many states (California, Oregon, Washington, Nevada among others) prohibit the tip credit entirely and require full state minimum wage, so BOH tip pooling is permitted there. The compliance nuance is real and varies by state; we flag the setup at onboarding and document the tip-pool policy in your payroll file. We do not give legal advice on this — large-dollar implementations need an employment attorney.
Form 8846 lets a restaurant employer claim a federal income tax credit equal to the 7.65% FICA tax paid on employee tip income above the federal minimum wage equivalent ($5.15/hr historical baseline, not $7.25). For a restaurant with $400k in reported tip income, that is roughly $400k × 7.65% × (portion above $5.15/hr baseline) = typically $20k-$28k in annual federal tax credit. The credit is non-refundable but carries forward 20 years. We track the data monthly (tipped employee wages, tipped hours, tips reported) and produce the 8846 figures for your tax preparer every January. Most independents who self-prepare or use a generalist firm have never heard of it.