Bookkeeping for Denver restaurants: tips, tronc, and the numbers that actually matter

Restaurants run on some of the thinnest margins in small business, which means the books are not a back-office chore — they are the difference between a good year and a quiet closure. They are also genuinely harder than most businesses’ books: tips, a brutal sales-tax setup, daily volume, and a labor model unlike anything else. Here is what restaurant bookkeeping has to handle on the Front Range.

Tips and tip reporting

Tips are where restaurant payroll gets complicated fast. Reported tips are wages for tax purposes, which means they flow through payroll, get taxed, and have to be tracked employee by employee. If you pool and redistribute tips — a tronc-style arrangement — the allocation has to be documented and run correctly, or you create both a tax and a labor-law problem.

There is an upside worth capturing, too: the FICA tip credit can give the business a federal income-tax credit for the employer payroll taxes paid on employees’ tips. Many restaurants leave it on the table simply because no one is tracking the numbers it depends on.

The tipped-wage and local minimum-wage maze

Colorado allows a tip credit, so tipped employees can be paid a lower base wage as long as tips bring them above the full minimum. But Denver sets its own local minimum wage, higher than the state’s, which changes the math for any restaurant inside the city. Getting the base wage, the tip credit, and the local minimum to reconcile every pay period is a recurring source of payroll errors — and underpaying is an expensive mistake.

Sales tax, the restaurant way

Prepared food and drink are taxable, and because Denver is a home-rule city with its own collection, a restaurant’s combined rate stacks state, city, and special-district taxes into something near 9% in much of the metro. You are charging it on every ticket and remitting it on a schedule — and a restaurant’s daily volume means even a small rate error compounds quickly. (Our Colorado sales-tax guide covers the home-rule mechanics.)

Prime cost: the number that runs the kitchen

The metric that matters most in a restaurant is prime cost — your cost of goods sold (food and beverage) plus total labor. Run as a percentage of sales, it is the single best early-warning system you have; when prime cost creeps up, margin is bleeding somewhere. But it is only as good as your COGS, which means real inventory counts and accurate food-cost tracking, not a guess.

Daily sales reconciliation

A restaurant should reconcile the POS to the bank every day, or close to it: gross sales, comps and discounts, sales tax collected, tips, and the deposit all have to tie out. Skip it and small discrepancies — a miskeyed comp, a delivery deposit that never arrived — disappear into the volume until they are a real hole.

Third-party delivery

DoorDash, Uber Eats, and Grubhub each report and pay differently, netting their commissions before they deposit. If you book the deposit as your sale, you understate both revenue and expense and lose sight of how much each platform actually costs you. Delivery needs to be grossed up and tracked per platform, or you cannot tell which channels make money.

Why generic bookkeeping falls short here

A bookkeeper who treats a restaurant like any other retail business will miss the tip credit, mangle the delivery accounting, and never surface prime cost. Restaurants need books built around how a restaurant actually makes — and loses — money. That is the kind of industry-specific setup we build for Front Range food-and-beverage clients.

If your restaurant’s books feel like they are always a step behind, a short conversation will tell you what is missing and what it would take to get clean. No pitch — just a straight read on where you stand.

This article is general guidance for Colorado restaurant owners, not specific tax, payroll, or labor-law advice, and rates and rules change. Confirm current wage and tax rules and talk through your specifics with a professional.