Q How do I reconcile myself and my business to any new changes under a new president?
A With a new president in office and the changes in Washington, we should anticipate changes to the tax code to pay for new programs, if any, that get implemented. Whether or not your party won the White House this year, you will need to become reconciled to this new reality—and its effect on your operations—while it lasts. And reconciliation starts with your accounting.
In my world, we reconcile our bank accounts to bank statements; our credit card balances to credit card statements; our sales tax balances to our state taxing agency’s records; and our payroll tax liabilities to IRS records. In other words, your restaurant operation’s accounting records need to agree with all these independent records. Working with your accountant to reconcile these records gives you a snapshot of your operational profit/loss at the date you made the effort to reconcile. It also gives you a comparison between periods of time, such as day-to-day, month-to-month or year-over-year.
You should ensure that all of your accounting records are reconciled through November and before year-end as quickly as possible. This will give you a picture of how current laws affect your operation’s profitability; then, if those laws change, you can better gauge their impact on your business. In addition, the new federal rule covering overtime pay means the minimum weekly salary threshold under which employees are eligible for overtime pay increased to $913 per week on December 1, thus potentially affecting your operational profit and tax obligations.
Too many restaurateurs fall into a holiday-season mentality: They’re slammed with extra business, catering and parties, employees keep calling in sick, and their back office starts bleeding money. Your pizzeria may be generating extra cash flow and seem overly busy, but if all of your accounts are not reconciled, that important activity from November to December will not be accurately measured.
Reconcile your internal records first. Next, reconcile your financial operations to the proposed business or tax law changes being introduced into our economy. Finally, create lemonade out of lemons by reconciling your employees and customers to any changes you must make, such as price increases or employee scheduling.