Coffee shop bookkeeping services

A low ticket and a high transaction count

Bookkeeping for a coffee shop shares most of its structure with a restaurant: a POS, card deposits, tips and food cost, all covered on our page on restaurant bookkeeping. What is different is scale in the other direction. A coffee shop sells hundreds of five-dollar tickets a day. A sync that posts every sale to QuickBooks Online fills the file with thousands of entries a month, none of which match the bank, and makes the monthly reconciliation impossible.

Post one summary per day instead. Many POS integrations (Square, Toast, Clover), directly or through a connector app, can post a daily summary rather than each sale; where they cannot, the bookkeeper enters the end-of-day report. Each POS connects differently: Square has a free connector from Intuit, while Clover and Toast need their own sync or a paid app. A day’s summary, split the way the books need it:

Date	Account	Debit	Credit
Oct 15	Card Clearing	2,145.00
Oct 15	Cash Drawer Clearing	185.00
Oct 15	Beverage Sales		1,560.00
Oct 15	Food Sales		410.00
Oct 15	Retail Coffee & Merchandise		120.00
Oct 15	Sales Tax Payable		75.00
Oct 15	Tips Payable		165.00

The card processor deposits the day’s card sales net of fees a day or two later; record the fee as an expense, as in our fix for credit card processing fees. At month end, Card Clearing and Cash Drawer Clearing should be close to zero. If they are not, a deposit is missing or was recorded somewhere else.

Splitting beverages, food and retail matters for more than reporting. Many states tax prepared food and drinks but not, or at a different rate, packaged coffee beans sold to take home. The POS item setup decides what is taxed; the summary’s sales tax line should agree with what the POS says was collected, and the return should agree with both.

What a drink costs

Coffee shop margins are made a few cents at a time, so the useful number is cost per drink, built from the recipe. An illustrative 12-ounce latte selling for $5.25:

Ingredient	Basis	Cost
Espresso, 18 g	Beans at $14.00 a pound	$0.56
Milk, 10 oz	$4.50 a gallon	$0.35
Cup, lid and sleeve	Per set	$0.22
Total		$1.13
Cost as a share of price		21.5%

The figures are examples; the method is the point. A price change from the roaster or the dairy moves every drink on the menu, and a shop that knows its recipe costs can see what a 15% bean increase does to the latte before it shows up in the month’s profit.

What should COGS be for a coffee shop?

The right figure is the one the menu’s recipe costs predict for what was actually sold, not a number borrowed from another shop. In the latte above it is 21.5% of the price; a menu weighted toward drip coffee usually runs lower, and one weighted toward food runs higher. The books then check the recipe costs against reality. Give coffee, dairy and alternative milks, food, and paper goods each their own cost of goods sold account. Each month, cost of goods as a share of sales should land near what the recipe costs predict for the mix sold. When it runs well above, the difference is waste, over-pouring, unrung drinks or theft, and a weekly look at purchases against sales catches it before the month is gone. Counting coffee, milk and paper stock at month end and adjusting the books to the count, using the method in the journal entry for inventory, keeps a big Monday delivery from making one week look expensive and the next look cheap.

Tips and the tip jar

Card tips belong to the baristas and are wages for payroll tax purposes; they sit in Tips Payable, as in the summary above, until payroll pays them out. Cash in the tip jar is tip income to the employees too, and employees must report tips of $20 or more a month to the employer. A shop that pools tips should have the pool rules written down and run the shares through payroll, not out of the drawer. The tip treatment and the FICA tip credit available to food and beverage employers are covered in our post on bookkeeping for restaurants.

Coffee shop chart of accounts

A short chart that keeps the numbers a coffee shop owner actually manages by:

Account	Type	What goes in it
Card Clearing	Other current asset	Card sales until the processor deposits them
Cash Drawer Clearing	Other current asset	Cash sales until deposited
Coffee & Supply Inventory	Inventory or other current asset	Beans, milk, paper at month-end count
Tips Payable	Other current liability	Card tips owed to staff
Gift Card Liability	Other current liability	Gift cards sold and not redeemed
Sales Tax Payable	Other current liability	Tax collected, until filed
Beverage Sales	Income	Drinks
Food Sales	Income	Pastries, sandwiches
Retail Coffee & Merchandise	Income	Bags of beans, mugs, equipment
Coffee Cost	Cost of goods sold	Beans, espresso, tea
Dairy & Alt Milk Cost	Cost of goods sold	Milk, oat and almond milk
Food Cost	Cost of goods sold	Pastries and food
Paper & Packaging	Cost of goods sold	Cups, lids, sleeves, bags
Barista Wages	Payroll	Hourly wages, taxes, benefits
Equipment Repairs & Maintenance	Expenses	Espresso machine and grinder service
Card Processing Fees	Expenses	Processor fees

An espresso machine, grinders and a buildout are fixed assets, depreciated over their lives; the monthly entry is in the journal entry for depreciation. Machine servicing and burr replacements are repairs.

Coffee shop expenses list

Beyond the chart above, the costs a coffee shop owner should expect to see each month: rent and common area charges, utilities (espresso machines draw a lot of power), insurance, POS and payroll software, music licensing if the shop plays recorded music, waste and recycling service, water filtration, marketing, and loan payments, split into principal and interest. What can be deducted for tax, and when, is the preparer’s call; the books’ job is to have each cost in its own account in the month it was paid.

How much does coffee shop bookkeeping cost?

Fixing a coffee shop file usually means replacing a year of per-sale sync entries with daily summaries, splitting supplies into cost of goods categories, moving tips through payroll and tying sales tax to the returns. That is a cleanup engagement, scoped to the number of months affected.

$99per month of backlog20% off 6+ months

Once the file is clean, a monthly close posts the daily summaries, clears card and cash accounts, and reports cost of goods against sales, closed by the 5th business day. That is $99 a month (up to 3 accounts, up to 200 transactions a month), and $199 past either limit or with reporting by location. Owners can read how an engagement starts on the outsourced bookkeeping page. Other trades are on the industries page, and full pricing is on the pricing page.

Or send your file for a free review, with a written answer within 48 hours.