Cost Segregation Study

At ORBA, a number of our restaurant clients have chosen to take advantage of the benefits offered by conducting a cost segregation study.  The result of such a study is tax savings generated from accelerated depreciation expense and shortened depreciable lives of assets.  The ORBA Restaurant Group’s knowledge can help you to understand how your organization can benefit.

If you have incurred significant construction costs or leasehold improvements within the last few years, either as a result of opening your restaurant, building out an addition to your existing space, or remodeling your current space, contact your ORBA tax professional to discuss how we can help you.

Employee Theft/Fraud

Restaurants face a much higher probability of employee theft than other types of businesses. Without proper controls, many employees will claim much of your hard-earned profits for themselves or their friends and family.  Having an accurate and secure POS system, analyzing your food and pour costs on a regular basis, comparing and contrasting individual server statistics, and attracting – and keeping – the right people on your team are just some of the ways you can counteract employee fraud.  In addition to fraud detection and investigation services, our Certified Fraud Examiners (CFE) can help you review your current procedures and give you suggestions on how to strengthen your internal control environment.  Our goal is to help you minimize the impact of employee theft on your business so you can increase your bottom-line profits.

Entity Selection

While envisioning your restaurant concept, it is very important to consider the legal structure of your business.  Assets and operations of the restaurant business should be housed within a formal limited liability entity.  A limited liability company or corporation should be selected rather than a proprietorship or general partnership.  Articles of organization or incorporation should spell out the owners and the structure of the entity.  Liability protection is very important and can be accomplished with the proper entity.  In addition, the type of entity will have an effect on the income taxes of the owners.  ORBA can help you weigh the pros and cons of limited liability companies versus corporations.

Gift Cards

For restaurant owners, navigating the requirements to properly account for gift cards is not an easy task.  The tax rules for recognizing gift card sales into revenue differs from the revenue recognition requirements for generally accepted accounting principles.  As gift card sales continue to be a larger and larger part of a restaurant’s cash flow, understanding and applying these rules properly is an extremely important aspect to analyzing the financial success of your business.  Equally important is the tax treatment of unredeemed gift cards.  Recognizing the tax revenue too soon results in too much tax paid and deferring the recognition of unredeemed gift card income for too long can result in incorrectly filed income tax returns.  The ORBA Restaurant Group is ready to help you with all aspects of gift card accounting and tax compliance.

Inventory Controls

Proper inventory management helps reduce potential theft and maintains accurate financial information for internal analysis. Managing inventory can range from basic procedures such as performing monthly inventory counts and adjusting the general ledger accordingly to utilizing sophisticated inventory management software that is integrated with a restaurant’s POS and general ledger system. ORBA helps our clients identify and implement the system that best fits their specific needs.

Ratio/Benchmarking Analysis

Some restaurants monitor the pulse of their operations based on whether their bank accounts are increasing or decreasing. Since bank activity combines operating and non-operating cash flow transactions, such an analysis will not necessarily provide an accurate picture of operational profitability. At ORBA, we work with our restaurant clients to develop analytical tools that help perform a pro-active analysis of your restaurant’s operations, as well as compare your performance to industry benchmarks. We also work with our restaurant clients closely to identify which financial ratios are relevant for analysis and process the information to generate the reports that you need.

Restaurant Tax Credits

Many federal and state tax credits and incentives are available to food and beverage establishments.  These often-overlooked credits and incentives can greatly reduce a restaurant owner’s tax burden. ORBA’s Restaurant Group stays on top of the ever-changing legislation and will be proactive in keeping you informed of potential benefits or pitfalls that may affect you.  We will be there to help you navigate the entire process so that you are not leaving any money on the table.