Expert: Tony Figurelli - 2/11/2009

Question
QUESTION: Is there a ballpark percentage for the accounting/finance costs as to gross revenue? In house being staff expense and out of house being review and tax preparation. Your assistance is GREATLY appreciated.

ANSWER: Hello Mike,
It's hard to put a percentage to costs because sales volumes fluctuate from one operation to another.  I have found competent accountants for under $500/month even less if my in-house bookkeeper is doing most of the work.  

The ideal for me is pay a bookkeeper between $15-20/hr based on your needs for a 30-40hr week.  This person can do all your office/administrative work such as payroll processing, invoice transmittal, filing state and federal filings, etc.  Then have a certified accountant come in every other month or once  quarter to review and sign-off on the bookkeeper's work.

Hope this helps.
TF

---------- FOLLOW-UP ----------

QUESTION: Thanks, Tony! In actuality, the restaurant in question does $1.7M revenue annually. The accounting work is done outside with all input out of house. The work is then sent to another firm , reviewed, financials prepared and tax submission completed. The amount paid for this is $25,000 per year. Does that seem reasonable or more than reasonable? Thanks again very much  Mike

Answer
1.7M annually is not huge volume and having two outside companies to handle your invoice transmittal input and financial generation might be a little excessive for me.  In my experience you can save some money by being a little closer to the process.  

As an owner and manager I always felt that going through the invoices tells me a lot about where I can challenge my operations team, are the prices of high cost items being quoted out?  are they in line and consistent?  are the quantities being ordered by chef and manager not excessive, if inventory sits on the shelf you are wasting valuable cash flow and possibly not serving the freshest product possible.  Is there theft happening?  When you review your purchases(invoices) you learn about your business execution.

There is also a lot to be said for getting a quick turnaround of your operating results.  I like to get a turnaround of no more than 1 week.  I would want you to look at your payroll processing costs as well and count that as part of your administrative expense.

If, however, you feel like this is money well spent and fits into your style of management I would say it is not an unreasonable expense.

Hope this helps.
TF