Restaurant Accounting Services – Articles and Tips for Independent Restaurants

The Affordable Care Act — aka “Obamacare” — for Restaurants, in a nut shell:

The Affordable Care Act (ACA) is a confusing legislative jewel that most accountants, human resource managers, and insurance companies are hard pressed to explain clearly. The following is Restaurant Accounting Services review of the acts’ highlights and RAS’ attempt to help make it understandable.

The ACA applies to “large” businesses. A restaurant is defined as a large business if it has at least 50 Full Time equivalent Employees FTE’s, not counting seasonal workers. Full-time employees are those who work 30 hours – plus part-time employees that are equivalent to a full-time employee figured on a monthly basis. Example: Two (2) employees that average 15 hours per week, equal one (1) full-time employee.

Starting on February 28, 2016 (if filed by mail) or March 31, 2016 (if filed electronically), large employers will have to report health insurance census data to the IRS on Forms 1094 and 1095. These reports will summarize 2015 payroll and health insurance information.

Under the IRS Code, an Applicable Large Employer (ALE) must report information on Form 1095-C that discloses if an employer is subject to assessment of an Employer Shared Responsibility Payment (ESRP). The ESRP penalty is assessed on an ALE that does not offer Minimal Essential Coverage (MEC) OR offers MEC to fewer than 95% of its full time employees AND at least one of the full-time employees receives a premium tax credit to help pay for coverage on a Marketplace.

For 2014, Form 1095-C reporting by ALE’s is optional. The first applicable ESRP is for the calendar year 2015. They will be assessed in 2016, after the information reported for calendar year 2015 is received and reviewed by the IRS.

Required information for Form 1095-C is as follows:

Name, address and EIN of the ALE;
Telephone number of the contact person for the ALE;
Monthly report of each full-time employee’s share of the lowest-cost monthly premium for self-only coverage providing minimum value offered to that full-time employee under an eligible employer-sponsored plan;
Name, address and social security number of each full-time employee during the calendar year and the months, if any, during which the employee was covered under the plan;
Indication codes reporting the type of coverage offered – or that no coverage was offered – and whether this coverage was offered to the employee, spouse and/or dependent(s).

Affordability Test

The health insurance plan that an ALE restaurant offers to its employees also must meet “affordability criteria”. “Affordable” equals health care cost that is 9.5% or less of the employee’s annual household income.

To qualify for safe harbor, the health insurance deduction cannot exceed 9.5% of the EMPLOYEE’S annual income.

Example:

A single plan health insurance premium is $420.00 per month

You contribute 50% of a single plan to your staff, and they pay 50% (or $210.00 per month)

$210.00 x 12 months = $2,520 divided by 9.5% = $26,526.

Thus, any employee working 30 hours or more must earn at least $26,526 per year, or your plan is deemed not affordable and subject to ESRP. Or to look at it hourly, $26,526 divided by 1,560 hours (30 hours per week x 52 weeks) equals a full-time rate of pay of not less than $17.00 per hour.

In our example, if the employer has any full time employees making less than $17.00 per hour, then the employer must increase the amount of the employee’s contribution toward health care costs, and reduce the employees share.

Employer Shared Responsibility Payment (ESRP)

1. If you do not offer health insurance

If ALE does not offer health insurance, and at least one of your employees receives a federal tax credit to supplement their health insurance, your penalty is $2,000 per year for each full time equivalent employee over 30 people. If you have 60 people, then 60-30 = 30 x $2,000 = $60,000.

2. If you do offer health insurance

If ALE does offer health insurance, but does NOT meet the affordability test, then the ESRP is the same in 1. OR the number of employees receiving a federal tax credit to supplement their health insurance x $3,000 (whichever is lower).

Restaurant Owners – Please feel free to call or e-mail Bob Kiley with your ACA questions.

(866) 460-6225 www.restaurant-accounting.com

Restaurant Bookkeeper & Employee Embezzling

By Bob Kiley Leave a Comment

It is astonishing to Google “restaurant bookkeeper convicted of stealing”. The stories are endless and according to law enforcement, few are actually prosecuted. It is a difficult topic as it typically involves an employee once considered very close to the owner. Most business owners choose to keep it quiet when it happens to them.

In every instance the bookkeeper was a trusted employee. Why did they go from being a person who earned your complete trust to stealing? Everyone’s motive is different. It may begin with “just this once”, but then the amounts and tactics expand, and self-confidence increases as it goes undetected.

The reality is restaurant owners can only oversee so much. With the hours required to manage the income producing details of a restaurant and customer satisfaction, it is easy to understand a situation developing to where the bookkeeper is ultimately completely trusted with the restaurant’s financials.

What you will not find when you review the Google articles is bookkeeper embezzlement with Regional Multi-Unit Restaurants. Regionals, with extensive accounting departments, intentionally isolate in-house employees who handle cash and deposits, and sign vendor invoices for deliveries – from those with access to bank accounts, processing vendor payments, scrutinizing costs and financial reporting.

Regional operators are successful by working under the business school teaching that “Only what gets measured, analyzed and corrected improves.” The Regionals’ accounting staff identify and question every percentage variation, every week. If beer costs increase from 22% to 22.5% in one week, the Bar Manager will be answering for it.

What can be done to protect your money?

With proper assembly, coding, recording and reporting of a restaurant’s complete Prime Costs every week, key changes in Prime Cost percentages are instantly visible. Pilferage of funds, food and liquor cannot be hidden. Weekly reports provide a tracking means which enables management to address variations immediately. (See RASCAP Flash Report.)

Experts agree the only real means for the Independent Restaurant owner to keep everyone honest is to outsource their daily bookkeeping to restaurant accounting professionals. When restaurants are owned under a partnership, outsourcing also provides an impartial third party to provide checks and balances, segregate duties and financial management, all without any conflict of interest.

2014 Was a Volatile Year
for Restaurants Fresh Food Prices.

By Bob Kiley Leave a Comment

Restaurants Fresh Food purchase price adjustments are continuous, primarily due to the ripple effects of weather-related circumstances in the USA and beyond. However, in 2014 food costs raised significantly

In 2014 Restaurants “costs of goods sold” increased considerably. Beef & Veal product costs are up 11.5%, Pork 9.5%, Dairy 10.5% and so on. For 2015, Restaurant Prime Cost Fresh Food prices are again forecasted to increase at a rate higher than overall inflation. Significant increases are also forecasted in the wholesale costs of Beer & Coffee in 2015, due to weather-related conditions.

For regional Multi-Unit Restaurants with a staff of accountants tracking costs, this is not an issue. In fact, this is the reason Multi-Unit bottom-line profits are 2% – 5% greater than Independent Restaurants, even after their substantial back-office expenses. Large restaurant operations are successful by working under the business school teaching that “Only what gets measured, analyzed and corrected improves”.

The Prime Costs all multi-units track daily are also available to the independents by digging deep into systems that are commonly in place. However, the fact remains; the information must first be properly coded, recorded, and then mined from several areas beyond their POS Systems. This is time consuming and difficult to assemble in a fashion that can be easily understood & truly useful – every week.

However, there is an alternative. Since 2008, hundreds of Independent Restaurant owners have discovered that they too can enjoy the same resources of the regionals with Restaurant Accounting Services (RAS) as a member of their team – at a cost substantially less than in-house bookkeeping.

RAS’s growth & sound reputation is built on being the most complete, timely & cost effective Restaurant Bookkeeping alternative for the Independent Restaurant owner. RAS has accomplished this, and continues to improve with continuous investment in technology & employee training. Today RAS consists of more than 40 highly-skilled restaurant accounting professionals, focused solely on the complete cost oversight and structured daily bookkeeping for Independent Restaurants.

With accurate & timely Profit & Loss Statements, built on properly coded & recorded vendor invoices and POS derived sales data; RAS clients quickly see their complete Prime Cost fluctuations. This information is vital for timely adjustments in menu pricing, profitable daily specials & hourly employee scheduling. Late figures are useless for prompt adjustments to maximize next month’s profitability.

Restaurant Accounting Service reports are often customized to provide only the financial information clients want to share with its staff for cost accountability. In addition to their customized Weekly Flash Reporting and Profit & Loss Statements; RAS clients receive an up-to-date Balance Sheet, Accounts Payable with aging, detailed Sales Reports and reconciled Bank Accounts & Credit Card transactions.

To see if your Restaurant Bookkeeping is providing you with complete real-time reporting required for today’s restaurant management, contact RAS here or learn more about our services here.

“Controlling cash flow, minimizing losses & maximizing profits” – Only RAS!

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