Outsourced Bookkeeping for food truck business: There is just too much to do as a food truck entrepreneur. Ordering food, employing and training staff, cooking every day, receiving customer orders, cleaning, and so forth. How do you anticipate having time to be concerned about earning money?
And that’s the truth—the majority of food truck owners don’t stop to consider whether they are generating money.
Are you really in this merely for the fun of it, or do you even care about making a profit?
Unlike several business owners, operators of food trucks occasionally find themselves mired in minutiae. Too many small details are being focused on to see the big picture. The truth is that you must carve out time to concentrate on your outsourced bookkeeping and profitability, or you risk going bankrupt or becoming overworked. Let’s look at some important costs that a food truck entrepreneur must control.
Owner contributions and startup funding
Oh, yeah, this could get messy. In the early stages of a business, I’ve seen people make all kinds of foolish decisions that later result in a ton of confusion and hassles and invariably put the owner through a lot of needless stress, confusion, and accounting costs.
Let’s divide things up into a few categories.
Owner equity is just the money you invest as an owner, and it should be recorded as a contribution to owner equity on the balance sheet of the business. Can you provide your company with a loan? Yes, you can, but given the low startup costs of this company strategy, it is usually not essential. You should be charging interest when you take out a loan, which you would then have to pay back on your tax return.
To ensure they get their money back, I frequently see business owners record their contributions as loans on their financial records. Use an owner’s equity account if you want to do yourself a favour.
To ease your thoughts, you can divide it into ownership contributions and owner draws.
Use them only when necessary when using personal credit cards and bank accounts. All you are doing is creating a ton of work for you or your bookkeeper that costs money. Simply open a checking account for your business and transfer money from your private bank account. Establish an additional personal checking account if you don’t yet have a business set up to give yourself a tremendous favour until you do.
Read More: Restaurant Bookkeeping Services In USA
A third party’s cash
Decide whether it will be a loan or a partner investment before accepting money from others (friends, family, and investors). Find out the loan’s terms, such as the interest rate and maturity date, if it is a loan. Short-term loans for periods shorter than a year and long-term loans for periods longer than a year should be tracked separately as liabilities.
Make sure to discuss these specifics with your CPA and attorney if you are taking on an investment partner. Make sure to establish an owner equity account and adhere to your partner agreement about partner dividends.
This is a crucial area where I observe people trying to cut corners and save money. Every time, the development is the same. You start with handwritten tickets and only accept cash because you are simply dipping your toes in the water. That can only go so far. Stick with this strategy if you want to stay small.
Just be aware that you will lose a ton of time and have no idea where you are in terms of profitability.
I wouldn’t choose my POS system only based on price. From both a client’s and an owner’s perspective, ease of use is something I would take into account.
The customer will want something really simple to tip and pay for. They’ll demand straightforward electronic payment options. The system’s owner wants something simple to program, enter orders into, take payments from, and extract data from for their accounting system.
For me, Square is the top point-of-sale system for food trucks. It appears to be the most user-friendly and reasonably priced platform. What’s wonderful is that you can also manage payroll using Square.
Through a third-party program called Shogo, QuickBooks Online’s daily sales integration is straightforward.
Use of the Square integration is not recommended because it does not work, at least not in the way that you need the sales data to be integrated.
I observe how preoccupied individuals are with merchant fees. First, they believe that not accepting credit cards will save them money. A straightforward merchant fee can easily make up for all the time lost managing money, visiting the bank, etc. Electronic payments will also increase your consumer base. If I ran a food truck, I would accept just credit cards, end of story.
Owners frequently switch merchant processors to save a small amount, in my experience. They constantly believe they are being taken advantage of. Hidden fees frequently cancel out these marginal increases in merchant costs.
Having it work with your POS system is the cardinal rule of merchant processing. No matter what the rate is, if you are forced to use an unreliable external merchant processing system, you are losing money. You have added a manual procedure to both the client interface and accounting aspects of the business, which is the cause. Any small savings you make if your merchant processor doesn’t interact with your POS system will be lost to time or accounting expenses.
Attempt to get the most affordable merchant processing rate, but make sure it is compatible with your POS system.
Major startup costs
Food truck owners frequently just consider the truck’s acquisition to be among their initial costs. But there are a ton of other factors to think about.
Will extra gear be required once the truck is purchased? The response is either certain or quite likely. You might need to make some adjustments to the kitchen, and you should customize your trucks outside with your brand and emblem. To appropriately budget for the additional equipment you will need to purchase, you need to thoroughly outline everything you need to buy.
You might wish to research the local laws you must abide by looking into the license required to run a food truck. You might not have considered other significant costs, such as a fire suppression system.
Finally, as was already said, you should think about integrating a good POS system into your initial costs.
What kind of insurance coverage are you going to require? What plans are best for your company and should be discussed with your insurance agent? You will require general liability coverage in addition to vehicle insurance, at the very least for the truck itself. Remember that you will need worker’s compensation insurance if you want to hire staff.
The initial purchase of inventory
Due to owners’ perceptions that buying food and other necessities is a routine part of daily life, this is frequently disregarded during the starting phase. However, the cost of the initial inventory purchase can be high, so you should factor that into your launch costs.
Costs of operation
You are running a business if you own a food truck, so you will incur regular operating costs just like any other business. I strongly advise brand-new food truck operators to understand their business thoroughly from an expense perspective right away. You will become more adept at making a respectable profit as you gain a better understanding of where your money is going.
I won’t keep reminding you to shop around for the best deals. Each food truck will be unique in a distinct way. Certain vendors and some ingredients will be necessary. The profit margin is the only thing that matters to me.
You must choose a target percentage for your food expenses.
Let’s use the simple term “20 per cent” to describe it. In other words, if it costs you $2 to create a dish, you must charge $10 ($2 is 20% of $10). If you pay attention to percentages, you will succeed and run a profitable business model. If not, you will have difficulty.
Understanding your costs and that they change now gives you significant leverage. You’ll notice price changes if you have a thorough understanding of your company’s expenses and suppliers. At the very least once a month, if not every single day, you should assess the actual cost of each dish. Next, change prices appropriately. You will be successful if you use this strategy.
To increase sales, you’ll need to market your food truck. What method will you use?
Retaining the clients you’ve already served is one of the finest strategies to boost your earnings. It also takes a lot of time and money to attract new clients.
But how do you go about it?
Every time they complete a purchase, you receive an email. Impossible? Go on reading.
Through the epidemic, mobile ordering and processing have become commonplace. There are numerous advantages to using this approach, which is why so many eateries have adapted to it.
When a customer uses a mobile application like Order Patrol to place an order and make a purchase. With a system like this, your clients may scan a QR code to view the menu and then finish their order by selecting their items, determining whether they want any additional or subtracted components, and providing their credit card information.
They do, however, also type in their email address.
Additionally, if you have their email address, you can market to those who have already purchased your goods.
Send a discount their way. Give them a free extra item when they make a purchase. Request Google reviews from them.
All of these tasks, which are essential to your marketing strategy, are manageable through a system.
Monitor the return on your investment as well. You must learn from your clients how they learned about you. Pay close attention to what functions well and what doesn’t.
Owner and payroll payments
Payroll management is something you should avoid doing on your own. I’ve witnessed a great deal of business owners, not just those who operate food trucks, lose money when they try to handle their payroll. Or they can delegate it to their CPA. Payroll outsourcing is a good idea. I utilize a third-party payroll provider since I am an accountant.
The two main reasons I advocate outsourcing payroll are that it is affordable and that a lot of potential responsibility is removed from your company.
A third-party payroll provider will handle all of your W-2s, direct deposits, payroll tax filings, and other payroll-related tasks, and they will do so at a very reasonable price.
Because of Gusto’s straightforward price, simplicity of use, and exceptional customer service, we heartily recommend them. If you use Square as your point-of-sale system, they also have a fantastic payroll service that works directly with Square, saving you both time and money.
Do you not desire to be paid? It is important to account for and budget your income, whether you intend to pay yourself a W-2 wage or through an owner equity pull.
If you haven’t yet read Profit -First, do it now. While you’re at it, add The E-Myth to your reading list. The Profit First approach to your accounting system works, even though I don’t support it.
The basic idea is that you always get paid first.
Plan your owner’s payment and confirm that you receive payment each week. What else are you trying to do, then?
Licenses and permits
Permits and licenses should be considered an ongoing expense. Undoubtedly, you need a company license. Don’t forget to research permits for food handlers. Do fees vary depending on the location or event? If you’re interested in learning more about the numerous permits and licenses needed in your region, you might connect with other food truck entrepreneurs. You might discover some information that will help you avoid hassles, save time, and save money.
Outsourced Bookkeeping and Accounting
So monotonous, no? For a food truck entrepreneur, managing their bookkeeping can be extremely scary because they frequently don’t like it and don’t know how to do it.
However, if you neglect your bookkeeping, you won’t know if you are generating money, and if you don’t have a well-organized system that makes filing taxes simple, you might have to pay a significant tax preparation fee.
Your best bet might be to work with a bookkeeper who specializes in food trucks or restaurants. For a variety of reasons, you want a bookkeeper who is familiar with food trucks.
As a minimum, a bookkeeping system should be designed using QuickBooks Online Essentials.
QuickBooks Online-compatible systems include POS Square. Don’t take their assurance that your POS system connects with QBO at face value.
Systems like Clover claim to integrate with QBO, but they do so in a way that is ineffective for accounting purposes.
The only thing that counts to any developers or owners who care is that your daily sales report connects with QBO to match the deposits made by the merchant service.
The vendor accepts credit cards or bank bill payments to complete all transactions electronically. The bookkeeping is made easy and automated as a result, and a good paper trail is left behind.
Employer Gusto. Simple enough: they are the greatest. Excellent client support, a user-friendly platform, straightforward pricing, and smooth QuickBooks Online connectivity use Square Payroll if you already use Square POS because it will save you time entering the data.
Once established, a well-designed bookkeeping system can be effective and simple to manage. However, the mechanics of daily bookkeeping are all that matter. The reports that your bookkeeping system generates should be examined. Your profit and loss report is important.
But be careful to take a close look at a profit and loss statement that displays each line item as a share of revenue. This report is easy to create in QuickBooks Bookkeeping and has a lot of potential. You can concentrate on profit by paying attention to the percentages rather than the complete figures.
You can expand your firm as much as you’d like while maintaining a healthy profit margin if you can keep your percentages in check.
A skilled food truck bookkeeper will provide you with much more information than just an evaluation of your performance. You will learn about their potential performance from them.
Future performance is crucial, so think carefully about it. You can do this by creating a financial projection.
It will be simpler to make the required modifications to keep your firm on track with your goals if you plan how it will operate and then compare your actual performance to expectations (budget vs. actual report).
Need to buy a significant piece of machinery? Make a plan.
Wish to employ someone? To ensure that you can afford it and are still satisfied with your profit margin, include that in your forecast.
Want to put money into a particular marketing endeavour? Include that in your projection, along with the effect you anticipate it will have on your revenue and net profit. After that, compare your
actual performance to your expectations to see whether you are happy with the return on your investment.
It’s possible to have fun with outsourced bookkeeping. If done correctly, it may truly be a tool you employ to operate a highly profitable food truck.
Our Bookkeeping Experts are here to help.