- Understands your restaurant and uses this knowledge to offer strong advice for improving your operations and finances;
- Analyses sales, expenses and margins to identify problems and improve profitability;
- Provides sound tax advice to legitimately maximize your deductions and minimize your taxes;
- Ensures that you comply with all tax laws, and
- Knows how to document and prove your margins to a tax auditor.
The last point deserves a bit of an explanation.
Most accountants are used to dealing with small business tax audits. In fact, they’re relatively easy. Provide documents to prove sales and expenses and ensure that the deductions comply with the tax laws. Sometimes, we have to do this during restaurant tax audits, but it’s not enough to satisfy the tax auditor. It’s not enough to report your margins, you (and your accountant) must prove them.
I’ve discussed how restaurant tax audits are conducted here. Traditional accounting documents (invoices, cheques, etc…) are used during restaurant tax audits. But, because restaurant audits use indirect audit methods (such as the mark-up method), you need to have other evidence to prove your margins. This “other” evidence is not usually gathered by accountants or bookkeepers. Without it, your risks of getting hit with a large tax bill at the end of an audit jump.
So, a “good” restaurant accountant, not only handles all of your accounting and tax compliance needs, he or she ensures that you can prove to the tax auditor that you did not hide any sales or taxes.