Ive just started to look after three restaurants, 2 of which are based close together in Manchester. They are run through separate limited companies and mostly keep all the paperwork separate, apart from:-
1) Some of the food ordering to a couple of suppliers is done by the out of town restaurant and the food used by the city centre restaurant. The owner wants me to split the invoices 40 / 60 in the books. They are both VAT registered so my initial thoughts are we shouldnt do it. Then I wondered if we could do so by copying the invoices and claiming 40 / 60 from the business, so claiming VAT in these ratios - although then I wouldnt have a VAT invoice in the correct company name so that worried me. I then wondered about processing it through the out of town/VAT claim as usual and then creating sundry debtors/creditors each month to split out per the above ratio, but this wouldnt work as the Director is looking for more accurate Gross Margin figures for each restaurant and this latter option wouldnt provide that.
2) The staff are paid under separate payrolls for each company dependent on the restaurant they work for (hourly paid/part timers). On occasions the staff may have to work at the other 'branch' due to staff shortages etc. Again the Director is looking to apportion the cost out to the company that it relates to. Suggestions are possibly putting the payroll through the holding company and apportioning it out (with the holding company making a loss!) or do we do some kind of internal transfers between the companies?
Want easy/transparent/non messy methods if possible.
Anybody have any ideas? If you cant answer both question then would still appreciate your assistance with the one you can answer!!
Thanks in advance
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
'Simplest' way for this complicated procedure would be to have intercompany or separate P/L accounts between these 2 restaurants.
Please note that this could get messy if not administered correctly in the 2 sets of data....
Enter all invoices and bank payments to the restaurants that they relate too, to split the costs the easiest thing to do would be a separate exercise to apportion the required 40/60 split and reduce the purchase amount as this is for the other restaurant.
EG:
Restaurant 1 receives purchase invoice of £1,000 + VAT - post this as normal. Then assuming 40% of the stock is for Rest 2:
Create a sales invoice from Rest 1 to Rest 2 for £400 + VAT (Crediting Purchases code rather than sales....This is effectively a management charge)
Post this in Rest 2 as a Purchase invoice for £400 + VAT to purchases
This would mean that Rest 2 owes Rest 1 £400 + VAT
Restaurant 1 would have purchases of £600
Restaurant 2 would have purchases of £400
This would give the director the appropriate Gross margins.
Same applies to the Wages, effectively a recharge of costs between the 2, think that VAT would still apply - there are better tax experts on here than me so they can confirm / correct if required
I would recommend you do this as one monthly invoice for everything if you maintain the appropriate reallocated costs in a separate spreadsheet?
Ideally the restaurants should settle these intercompany balances regularly.
Interested to see if anyone else has any thoughts....
Hope that helps
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Hi Jeremy
I was only wondering late on Friday if the best way to do this was by issuing invoices on an intercompany basis, but my overworked brain was pondering how to make sure one restaurant was not still overstating its purchases - didnt think to adjust via purchases (well wasnt sure if this was 'allowed'. It certainly makes complete sense now reading what you have said.
Looks like they have done some adjustments in the past (before my time) but as I proved on Friday when I was with the client - I couldnt tell him what everything related too as not enough detail was on Sage and he couldnt remember. The invoice and separate spreadsheet option is a good way of doing t hings - then there is no need to rely on memory and it ensure it is done correctly.
Re the wages - thats a great point about the VAT too, so if anyone else has any input - let me know. (I may have to post this as a separate query).
Thank you so much for your detailed and helpful response Jeremy. (I love your profile piccie!)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
