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How to Have Enough Cash for Payments You Can't Afford to Miss

How to Have Enough Cash for Payments You Can't Afford to Miss

Have you ever been faced with a sales tax or payroll tax payment deadline and not have the cash to pay it? Many operators have and if you're one of them you know the taxing authorities always get their money one way or another and in the process and force you to cough up sizable penalties and interest too. Not making timely tax payments is the most expensive form of short term financing there is.

While most businesses experience cash flow challenges from time to time, here's a practice to help you have the cash you need when those, "mandatory, non-discretionary" tax obligations are due.

First, open up a separate "reserve" bank account. Yes, a separate bank account to deposit those funds like sales and payroll taxes that really isn't your money to spend anyway.

Next, modify your daily sales report so that the "deposit" is broken into two amounts. One for the taxes collected on your sales of food and (if applicable) alcoholic beverages, the other for the non-tax portion of the deposit. Then make two deposits, the tax receipts go into the "reserve" account and the balance of the cash into your normal operating account.

On your daily sales report it's also a good idea to add to the " tax receipt deposit" the daily average of the payroll tax deposit you normally pay each payroll period. This way you're also putting enough cash away to make timely payments of your payroll taxes too.

Cash crunches are never easy to deal with. But, establishing a " reserve account" discipline will help you get through those tough times without incurring additional penalties and fees from not paying the tax man on time.

Featured Articles & Resources at RestaurantOwner.com.

Download: Weekly Cash Flow Worksheet

Even if your restaurant is profitable, your cash balance ebbs and flows. Use this simple but highly useful worksheet to better anticipate and respond to your constantly changing cash position.

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Download: Weekly Cash Flow Worksheet

Webcast: How to Protect Your Restaurant From Theft & Fraud

Employee fraud - from check-forgery schemes to product going out the back door, tend to rise during tough economic times, when workers are feeling financial stress in their personal lives. Even more than many other types of small businesses, restaurants are particularly ripe for the potential of fraud and abuse. What do restaurants usually have in plentiful supplies? Answer: cash, food and alcoholic beverages that are overseen by an owner who is often naturally trusting of others and not well versed in basic business controls.

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Webcast: How to Protect Your Restaurant From Theft & Fraud

Download: Daily Voids Log Sheet

Theft prevention 101 - never let your bartenders, servers or cashiers void items after they have been rung up. It's ok to give them the ability to void (item correct) an item "while" they are in the process of ringing the check; however, once the check has been recorded (saved or printed) then only management should be allowed to perform a void function.

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Download: Daily Voids Log Sheet

Four Things Every Restaurant Operator Should Know About Restaurant Finance

Here are four viewpoints on purchasing offered by experienced and respected restaurant advisors and operators. Take this opportunity to focus on how you are managing your vendor relationships to determine if you are leaving any money on the table at a time when you can use every penny.

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Four Things Every Restaurant Operator Should Know About Restaurant Finance

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