Do not make the mistake of confusing cash with profit. Cash can accumulate because you have deferred paying your suppliers or because some expenditure, e.g. annual holiday pay or rates, is not immediately paid out in cash although it is accrued in the monthly profit and loss account.
A profit and loss statement should be prepared every month or at least every three months. In the meantime, a record should be kept of daily and weekly takings as an indication of how the business is performing.
You will be earning money so you will need to declare and pay tax. By declaring an income, you can deduct expenses:
- Part of your home (kitchen and an office)
- Kitchen renovations
- Kitchen equipment
- Part of expenses for your car
- Recipe trials
And, you may be able to justify much more, including a trip for new ideas, food products and equipment. But to be able to deduct these expenses you have to keep very accurate records to support your claims.
It is a good idea to keep a file for each job and simply deposit all receipts in it at the end of the job. Keep a file for kitchen supplies and another for recipe trials. Also keep electricity, telephone and gas bills for the house and deduct part of these.
Since each job has its own file if I want to give a price quote on the same dish or a similar menu, all I need to do is look up the job and get all the facts (you may have to change the price, but it saves a lot of work). Records are useful not just for price but also for quantities. Keep a record of how much you prepared and how much was leftover.
Also, keep a recipe file of your favourite recipes, rather than having to sit for hours looking through recipe books trying to find it.
Catering Business Financial Controls
You are in business to make a profit and keeping correct financial records will enable you to measure, control, evaluate and forecast your profitability, your financial needs and your financial viability.
Want to know more about financial controls?
For a very low investment why not purchase a copy of:
‘How to Cook the Books’ eGuide
and find out how to plan your finances.
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