Can you please tell how to set up the accounting books for a grocery store from scratch? Like what is required to have a full bookkeeping system for a grocery store.
Setting up the books for a grocery store is much the same as setting up the books for any small business. To have a full bookkeeping system you will need a set of columnar pads or even better, a bookkeeping or accounting software program. You will want to consider is how you will keep paperwork such as receipts for purchases of costs and expenses and how you will records your customer’s purchases at the point of sale at the cash register. You will want to have a system in place for recording your total sales from the cash register tapes and credit card processors into the bookkeeping system.
The chart of accounts is the first thing you will do setup. For a detailed tutorial on setting up the chart of accounts you can visit my introduction to the Chart of Accounts.
You will be using the following types of accounts in your chart of accounts:
Costs of Sales
You will have asset accounts such as ‘Bank Account’ and ‘Inventory’ if you keep inventory. ‘Furniture and Fixtures’ and ‘Accumulated Depreciation’ will also be assets in your chart of accounts.
Liability accounts would include ‘Accounts Payable’ if you purchase inventory on account. You will also have accounts for ‘Goods and Services (Sales Tax) Liability’ for tax you collect on taxable items and ‘Payroll Liabilities’ for your payroll.
You will also create a Capital account to track money invested or received by owners or shareholders.
To keep things simple you can track your sales and cost of sales with accounts such as ‘Grocery Sales’ and ‘Grocery Costs’. You can add more if you want more detail in tracking your sales and costs.
Expense accounts would be items such as ‘Payroll Expense’, ‘Advertising’, ‘Office’, ‘Utilities’, ‘Telephone’, ‘Rent’, ‘Travel and Entertainment’. After setting up your chart of accounts, you will want to set up your journals and subsidiary ledgers if you are not using bookkeeping software. If you are using software, it will set up these for you as you go through the EasyStep Interview and create your chart of accounts.
A key consideration in setting up your bookkeeping is your inventory system. Will you be performing regular physical inventory counts or not? This will be the deciding factor in how you determine your cost of sales. If you count inventory on a regular monthly basis you will be able to determine the costs of the items that were sold by what you paid for each item. If not, you will have to use what is called the percentage method to estimate the total cost of all items that are sold each month.
The kind of bookkeeping system you use depends on the needs of your business and of course how much you want to spend. Assuming your grocery store is a small business, I recommend using a software program such as Quickbooks to handle your bookkeeping. Intuit has many different programs and may have a solution that is a good fit for you and your store. Bookkeeping software makes entering data into the books very easy and it will help you track your assets and liabilities as well as manage a payroll and inventory. This is just a brief overview of how to set up the books for a grocery store.
I was searching for help on how to set up book keeping for a medium sized supermarket and came to your site, so kindly help me out on how and which book to use for the daily operation of my store.
I think a bookkeeping program like QuickBooks Pro could be enough, but I can't say for sure without seeing how you operate the supermarket. It is possible that you may need a different program that will be able to handle more complexity especially when it comes to inventory. My recommendation is that you visit Intuit's website and take a look at their QuickBooks Enterprise Solutions software. Read what they have to say about the software and if you think it might fit your business, you can contact their sales team to talk with someone directly about your specific situation.
I also recommend working with a bookkeeper and accountant to help you get your bookkeeping set up properly. Doing so will help to make your life easier and allow you to stay more focused on other aspects of your business. It is also easier to get help from someone who can work side by side with you in keeping the books since they can see your business in person.