By OptiVal Editorial Desk
Bookkeeping for restaurants is a different animal from bookkeeping for almost any other business. A service firm invoices a handful of clients. A restaurant runs hundreds of transactions a day across cash, cards, and delivery apps, carries inventory that literally goes bad, handles tips under rules the CRA treats very specifically, and charges sales tax at rates that change at every provincial border. Here is what trips up restaurant owners.
Bookkeeping for restaurants: why the books go sideways
A single day can include dine-in sales, takeout, three delivery platforms, gift card redemptions, staff meals, comps, and a tip pool split five ways. Bookkeeping works when every revenue channel and every major cost category gets its own line, every day.
Start with a dedicated business bank account and card, accounting software with a live bank feed, and a POS that exports clean daily totals. Our QuickBooks vs Xero comparison for 2026 covers the two most popular options for Canadian businesses. Either works for a restaurant; POS integration quality matters most.
Sales tax on meals: know your province
Prepared restaurant food is taxable everywhere in Canada, but the rate depends on where it is served. Ontario charges 13% HST. Nova Scotia charges 14% (cut from 15% on April 1, 2025). New Brunswick, Newfoundland and Labrador, and Prince Edward Island charge 15%. Alberta and the territories charge 5% GST only. British Columbia charges 5% GST on restaurant meals (PST does not apply to meals, though liquor carries 10% PST in BC). Saskatchewan is 11% (5% GST plus 6% PST), Manitoba is 12% (5% GST plus 7% retail sales tax), and Quebec is 14.975% (5% GST plus 9.975% QST).
Ontario has a wrinkle: qualifying prepared food and beverages sold for $4.00 or less get the 8% provincial portion of the HST rebated at the point of sale, so the customer effectively pays the 5% federal part. If your POS is still charging the full 13% on a $3.50 coffee, you are overcharging customers and the paperwork is wrong.
One more rule: a mandatory service charge (the automatic gratuity added for large parties, for example) is subject to GST/HST. A freely given tip is not. Know which one your POS is applying.
Tips: controlled or direct, the CRA wants it right
All tips and gratuities are taxable income in Canada. How they get reported depends on who controls them.
Controlled tips are tips the employer controls or possesses: a mandatory service charge on the bill, tips allocated through an employer-run tip pool, or tips the employer collects and redistributes. The employer is considered to have paid them, so they go on the employee’s T4 (box 14), the employer withholds income tax, and CPP contributions and EI premiums are deducted and remitted like regular wages.
Direct tips are tips the customer pays straight to the employee with no employer involvement: cash left on the table that the server keeps, for example. The employer has no reporting obligation, and no CPP or EI applies. The employee must track every dollar and report the total on line 10400 of the tax return.
The practical takeaway: if you run a tip pool, write the policy down and decide whether it is employer-controlled. Most employer-run pools create controlled tips, which means payroll deductions apply.
The daily close routine
Restaurants live or die on the daily close. Every day, before the numbers fade:
- Run the POS day-end report and record gross sales by channel: dine-in, takeout, each delivery platform.
- Count the cash drawer and compare it to the POS cash total. Investigate gaps the same day.
- Reconcile card deposits to the POS card totals.
- Log discounts, comps, and refunds separately. A comp is not a discount, and both belong on their own lines so food cost stays honest.
- Track gift cards sold versus redeemed. A sold gift card is a liability, not revenue. Revenue happens when the card is redeemed.
Delivery apps: record the gross, book the fees separately
Delivery platforms are the ecommerce payouts of the restaurant world: the deposit never matches the sales report. Record the full menu sales as revenue, and book the platform commission as its own expense line. Booking the net payout as “sales” understates revenue, hides your true delivery cost, and makes food cost percentages meaningless. Reconcile each payout monthly against the platform’s payout report, parking differences in a clearing account until they resolve.
Inventory and food cost: the number that makes or breaks you
Food cost percentage is cost of goods sold divided by food sales, times 100. And cost of goods sold is opening inventory plus purchases minus closing inventory. That formula is why inventory counts matter: without a real closing count, your food cost is a guess. Count weekly at minimum for perishables. Accrual accounting (recording purchases when received) is the only way this math works, because it matches deliveries against sales in the same period.
As rough industry benchmarks: full-service restaurants often run food cost between 28% and 35% of revenue, labour between 25% and 35%, and prime cost, which is food and beverage cost plus total labour, under 65%. When your weekly food cost drifts a few points, check portioning, waste, supplier prices, and shrinkage, in that order.
Labour: your biggest controllable line
Track wages, overtime, payroll taxes, benefits, and tips as one labour picture, and compare it to sales weekly, not monthly: a monthly number arrives after four weeks of overstaffed Tuesdays. Employer-controlled tip pool payouts carry employer CPP and EI on top of wages, which belongs in the labour number.
The payroll mechanics are the same as any Canadian employer: source deductions remitted by the 15th of the following month, T4s out by the last day of February. Our CPP and EI guide for employers covers the deduction mechanics in plain English.
The mistakes that cost restaurant owners money
Most restaurant books fail in the same places. Mixing personal and business spending. Skipping inventory counts, which makes food cost fiction. Forgetting input tax credits on supplier purchases. Treating delivery payouts as revenue, which understates sales and hides platform costs. And no written tip policy.
Keep everything the CRA expects for six years from the end of the tax year: POS day-end reports, payout reconciliations, supplier invoices, inventory counts, tip pool records, and payroll filings. Our records retention guide covers exactly what counts.
When to hand the books to someone else
The signs the DIY era is over: the daily close has not been done in weeks, delivery payouts have not been reconciled in two months, or tax season means rebuilding the year from bank statements. If you are already behind, our catch-up bookkeeping guide walks through the fix.
Our bookkeeping plans start at $199 a month, HST/GST filings are $99 a quarter, and a full cleanup of messy books starts at $45 an hour. We are led by qualified professionals with more than 75 years of combined experience, and we handle the daily reconciliations, the sales tax filings, and the CRA-ready records so you can run the floor instead of the spreadsheet. Book a free consultation, and see what is included on our pricing page.
