The Essentials of Accounting & Bookkeeping for Franchisees

It involves maintaining accurate financial records, tracking expenses, managing payroll, and ensuring compliance with tax regulations—all conducted online by experienced bookkeepers. A single-unit franchise is a stand-alone business that operates independently under the franchisor’s brand name and business model. In this model, the franchisee is responsible for all financial transactions, including bookkeeping, payroll, and taxes. The franchisor provides training and support, but the accounting process is entirely managed by the franchisee. This model is suitable for those who want more control over their business finances.

Having multiple locations means dealing with different sets of expenses, revenues, and tax obligations. Good bookkeeping helps you navigate these complexities by consolidating your financial data into an easy-to-understand format. This information can help you make informed decisions, prepare for taxes, and identify growth opportunities.

Jackson Hewitt Tax Service

Franchises have a few different unique fees and expenses that aren’t present in non-franchise situations. If you’re new to entrepreneurship and need help getting started with accounting for your franchise, you’re in the right place. Here, we’re going to cover everything you need to know about franchise accounting, including how to do it yourself and how to know if you need to hire a professional.

We are life-long learners, passionate about teamwork and excellence in our respective roles, with a solution-oriented approach to challenges. We’ll take the bookkeeping off your hands so you have more time, support, and insights to grow your business. In the rare event of errors or discrepancies, we will promptly identify and rectify them, working diligently to maintain accurate financial records for your franchise. You became a franchisor to create a model to scale effectively and the opportunity to watch your brand reach new heights.

‘Real Housewives of Beverly Hills’ Season 13 on Track to Achieve Franchise’s Best 35-Day Viewership Since 2014 (EXCLUSIVE)

That puts you and your franchisee on the same page — literally —  from the very beginning. That, in turn, makes it easier to resolve disputes or misunderstandings or to avoid them in the first place. As mentioned earlier, some accountants have specific knowledge and expertise in franchise accounting, so they can ensure that you get your business bookkeeping for franchisees started on the right foot. What’s more, you can even hire accountants who have experience with your brand in particular, which can prove invaluable. A CPA can do things an accountant can’t, such as send your tax returns to the IRS. Understanding CPA compensation and benefits can help you decide whether hiring a CPA is the right option.

First up is what the franchisor is supposed to do with its business development expenditures. A variation is for the franchisor to also operate the unit for a period of time, and then hand it over to the franchisee, just to make sure that everything is running properly. Partnering with a bookkeeping company also ensures consistency and compliance across all locations, reducing the risk of financial discrepancies or errors. As mentioned before, these services can scale with your business, providing you with consistent, high-quality support regardless of your franchise’s size.

AccountingTools

Next, let’s assume that the franchisor is constructing facilities on behalf of its franchisees, with the franchisees paying advances as the work proceeds. In addition, the franchisor may charge the franchisee a fee to manage the construction process. The franchisor records these incoming payments in a development fund liability account, which the construction billings are then charged against. So, as you might expect, these arrangements can trigger some accounting issues.

When you partner with a bookkeeping company that specializes in franchises, you gain access to skilled professionals trained specifically in franchise financial management. These experts can provide valuable insights and strategies to improve your franchise’s financial performance. Moreover, an outsourced service can free you from the time-consuming task of managing books, allowing you to focus your energy where it’s needed most—growing your franchise. Outsourced bookkeepers are adept at dealing with franchise-specific requirements, such as royalty payments and franchisor reporting. This ensures you’re always in compliance and avoids any unwelcome financial surprises.