Accounting Period Confusion?

A new restaurant operator is faced with countless decisions from location and staffing to the lower priority items of accounting. The choices associated with accounting set up are not glamorous but setting good policies early on can save headaches down the line.
One question we ask new clients is “What type of accounting period would you like to use? Monthly? 4/4/5? 13-4 week periods?”. Operators coming from different industries often wonder the relevance of this question while those who have worked in many restaurants usually have an immediate answer.
Here are some factors to consider while dates swirl in your head.
Calendar month
· Easy to remember period dates
· Requires payroll accruals
· Year to year comparisons can be misleading when there is an extra weekend in one year
· Holidays are consistent for year to year comparisons

4/4/5 or 5/4/4- Two four week periods followed by a five week period
· Allows for the same number of each day of the week each year for comparisons
· If biweekly or semimonthly payroll is run payroll accruals are needed in some periods and not others
· Can be confusing for people wondering, “is this the five week period?”
· Allows flexibility in day of the week chosen for period end date
· Different reporting periods for sales and payroll taxes vs. financial statements

13 four week periods
· If a biweekly payroll is used no accruals are needed
· Allows for the same number of each day of the week each year for comparisons
· Allows flexibility in day of the week chosen for period end date
· Requires a “catch up” 53rd week be added every fifth year
· Different reporting periods for sales and payroll taxes vs. financial statements

One of the most important factors to consider when making the decision is who will be the primary user of the financial statements? Will it be operations staff or more financially savvy bankers? The more adept the user is at analyzing financial information, the more complex your set up can be.