Bookkeeping Alcohol Sales: Texas Restaurant Guide

Bookkeeping for restaurant alcohol sales in Texas involves several considerations, including legal requirements, accounting complexities, and data management. Restaurants in Texas offering alcoholic beverages need to comply with specific regulations, such as age restrictions for employees and permits for on-premises consumption. Additionally, there are rules regarding bringing outside alcoholic beverages into the restaurant and taking unfinished drinks out of the premises. Bookkeeping for alcohol sales can be intricate due to varying tax rates and the need to record sales per category, including alcoholic drinks, food, and tips. Continuous accounting and modern point-of-sale (POS) systems can streamline the process by enabling real-time transaction matching and capturing sales data. Texas offers resources like the TABS Report, providing alcohol sales data for establishments across the state, aiding businesses in tracking market performance and making informed decisions.

Recording sales by category (food, alcoholic drinks, etc.)

Using a Point-of-Sale (POS) System: Implement a modern POS system that logs every purchase made by customers. This simplifies the process of categorizing sales as the system can automatically categorize transactions, generating reports that distinguish between food, alcoholic drinks, non-alcoholic drinks, and tips.

Daily Sales Entries: Utilize the POS reports to make daily sales entries in your bookkeeping records. Regularly recording sales data helps you stay organized and saves you from having to go through the numbers on a granular level at the end of the month.

Separating Tax Categories: Different categories of sales may have separate tax implications. For example, alcoholic drinks may be taxed differently from food items. Ensure that you are aware of the applicable tax rates for each category and record them accurately.

Identifying All Income Streams: Restaurants may have multiple income streams, including cash, debit, credit, and loyalty programs. Ensure that you account for all these streams when recording sales. For instance, if your restaurant offers a free meal after a certain number of purchases, ensure that the reward is recorded as a component of a sales transaction according to accounting standards.

Accurate Ledger Maintenance: Maintain a clear and transparent ledger system that identifies sales, taxes, tips, and draws separately. This ensures that you can record the correct numbers and facilitates reconciliation during tax calculations or audits.

By following these steps, you can effectively record sales by category, maintain accurate financial records, and make informed business decisions based on your revenue streams.

Managing multiple tax rates on one invoice

In Texas, there are several tax rules that apply to restaurant sales, especially those that involve alcohol. For instance, if a restaurant sale is taxable, transportation and delivery charges are also taxable, even if stated separately from the sales price. In the case of a shipment containing both taxable and exempt items, delivery charges may be either taxable or exempt, depending on the ratio of exempt and taxable goods.

Firstly, it is crucial to record sales accurately and categorize them appropriately. Modern point-of-sale (POS) systems can be beneficial for this purpose, as they log every purchase made by guests, including the category of the sale (food, alcoholic drinks, non-alcoholic drinks, and tips). These categories are essential because they may each have separate taxes associated with them.

Secondly, for restaurants that offer loyalty programs, accounting for these activities correctly is essential. International Financial Reporting Standards (IFRS) specify that reward-related discounts should be booked as components of a sales transaction, not as marketing expenses.

Thirdly, continuous accounting practices can help streamline the process. This involves transaction matching in real time, often facilitated by an ERP system. By staying on top of daily and weekly sales and accounts payable, you can avoid the time-consuming process of reconciling accounts without complete information.

Additionally, consider utilizing hosted store solutions such as Shopify or Squarespace, which offer integrated sales tax rate determination and collection. These platforms provide a dashboard where Texas sales tax collection can be managed, simplifying the process for businesses.

Finally, it is worth noting that Texas is not a member of the Streamlined Sales Tax (SST) program, which aims to simplify sales and use tax for remote sellers. As a result, remote sellers need to register individually with Texas and apply the correct tax rates to all taxable sales.

By following these steps and staying organized, you can effectively manage multiple tax rates on one invoice for your restaurant sales in Texas, ensuring compliance with state and local tax laws.

Accounting for loyalty programs

Customer loyalty programs are a valuable tool for restaurants to increase customer loyalty, improve brand attitude, and incentivize repeat business. They are also highly regarded by customers, with 96% of loyalty and reward program customers saying they are a good way to get more value.

Loyalty programs can be points-based, where customers accumulate points that can be redeemed for freebies, discounts, or other perks. They could also earn points for other activities such as filling out surveys or leaving reviews. This requires a database that can track purchases and points, allowing restaurants to collect valuable customer data, such as meal favorites and ordering preferences. This data can be used to enhance the customer experience by providing more personalized services and exclusive access privileges.

From an accounting perspective, loyalty programs add complexity to restaurant bookkeeping. Various accounting standards have distinct rules about how to account for loyalty program activities. For example, International Financial Reporting Standards (IFRS) detail how to book reward-related discounts as components of a sales transaction, not as marketing expenses. Restaurants should also continuously account for sales and accounts payable on a daily and weekly basis to avoid spending excessive time and effort during the account reconciliation process.

In Texas, restaurants with different tax rates for food and beverages, including alcohol, may face challenges with bookkeeping and invoicing. For example, Quickbooks users have reported issues with handling two different sales tax rates on one invoice. Therefore, it is important for restaurants in Texas to carefully consider their bookkeeping and accounting practices, especially when implementing loyalty programs, to ensure compliance with regulations and efficient management of their finances.

Continuous accounting and transaction matching

Continuous accounting is a practice that involves recording restaurant sales and accounts payable daily and weekly. This method prevents the time-consuming process of going through the numbers on a granular level during the account reconciliation process. Continuous accounting is especially useful for restaurants with tight profit margins, which is often the case, as it helps streamline operations and cut unnecessary costs.

Restaurant bookkeepers can benefit from continuous accounting, which involves transaction matching in real time, often with the help of an ERP system. Transaction matching involves matching transactions in bank statements with those in the business’s internal records. This process helps to find and fix errors before they cause issues, as well as complete the period-end close faster.

For example, a restaurant may have multiple revenue streams and lots of transactions or operating expenses. In this case, the accrual accounting method may be more suitable as it records revenues and expenses when they occur, regardless of when the cash is received or paid out. This provides a more accurate picture of financial health by matching revenues with related expenses.

Alternatively, a simpler cash basis accounting method may be more appropriate for small, casual restaurants or food trucks with straightforward transactions. This involves recording each transaction in two accounts: a debit and a credit account. This method provides a comprehensive and accurate view of financial transactions and helps prevent errors and fraud by ensuring every entry is balanced.

Ultimately, the right accounting method depends on the specific financial goals and needs of the restaurant. Continuous accounting and transaction matching are essential components of effective bookkeeping, helping to streamline financial processes and provide valuable insights into the business's performance and overall health.

Hours of sale and consumption

In Texas, the legal hours of sale and consumption of alcoholic beverages vary depending on the type of establishment and the relevant permits or licenses held. Here are the specific details:

On-Premises Establishments (e.g., Restaurants and Bars):

For restaurants and bars licensed to sell alcoholic beverages for on-premises consumption, the legal hours of sale and consumption are not explicitly stated but are regulated by the Texas Alcoholic Beverage Code, Chapter 105. This code outlines the permitted hours for different types of alcoholic beverages and establishments.

Hotel Bars:

Hotel bars, which are defined as establishments located within hotels with permits or licenses for on-premises alcohol consumption, have their own set of hours for sale and consumption outlined in Section 105.091 of the Alcoholic Beverage Code.

Wine and Malt Beverage Retailers:

The hours of sale and delivery for retailers with wine and malt beverage permits are the same as those prescribed for malt beverages under Section 105.05 of the Alcoholic Beverage Code.

Package Stores (Liquor Stores):

Employees of package stores, or liquor stores, must be 21 or older, indicating that the legal age to purchase and consume alcohol in Texas is also 21. However, the specific hours of sale are not explicitly mentioned.

Wine-Only Package Stores:

Wine-only package stores, which sell wine for off-premise consumption with a higher alcohol content than typical grocery stores, only require their employees to be 16 or older. Again, the specific hours of sale are not mentioned.

It is important to note that Texas has specific signage requirements for establishments licensed to sell alcoholic beverages. While blue signs indicating alcohol sales are no longer required under state law, certain signs are still mandated for on-premises and off-premises establishments, as outlined on the Texas government website.

Regarding bookkeeping practices for alcoholic sales in Texas restaurants, it is essential to record sales per category, including food, alcoholic drinks, non-alcoholic drinks, and tips, as these may have separate tax rates. Continuous accounting practices, such as daily and weekly transaction matching, can help streamline the bookkeeping process and ensure accurate records.

Frequently asked questions