Introduction
For most food entrepreneurs, accounting feels like the least exciting part of building a brand. But neglecting your numbers can quietly kill your business—even if your product is loved by customers.
Accounting isn’t just about tax compliance. It helps you price better, avoid cash crunches, track profitability, and impress investors. At FoodResso, we coach founders and startups to master financial basics without becoming accountants.
In this guide, we’ll break down the must-know accounting principles, key documents, practical tools, and common mistakes—with real-world examples and clear actions.
“Accounting is the language of business.” — Warren Buffett
1. Understand the Basics: What is Accounting?
Accounting is how you record, organize, and report your business’s financial activity.
For startups, the main goals are:
- Track how much money you make and spend
- Know if you’re profitable
- File taxes properly
- Attract investors or get loans
There are two key types:
- Bookkeeping – the daily recording of transactions
- Accounting – the analysis and reporting of those transactions
Even in year 1, you need a simple system. A pile of receipts and a spreadsheet won’t scale.
2. Learn the Key Accounting Terms
Here are some essentials you’ll encounter frequently:
- Revenue: Total money from sales
- COGS (Cost of Goods Sold): Direct costs to make your product
- Gross Profit = Revenue – COGS
- Operating Expenses (OPEX): Rent, salaries, marketing, etc.
- Net Profit = Gross Profit – OPEX – taxes
- Assets: What your business owns (equipment, cash)
- Liabilities: What your business owes (loans, payables)
- Equity: What’s left after subtracting liabilities from assets (your stake)
3. Choose the Right Accounting Method
There are two ways to track transactions:
A. Cash Basis Accounting
- Record income when you receive money
- Record expenses when you pay them
✅ Simple, easy for small startups
❌ Doesn’t show what you owe or are owed
B. Accrual Basis Accounting
- Record income when it’s earned (even if not paid yet)
- Record expenses when incurred
✅ Gives a more accurate view
❌ More complex, needs tools or a bookkeeper
Tip: Start with cash basis, then shift to accrual by Year 2 when sales increase or investors get involved.
4. Set Up Your Chart of Accounts (COA)
A Chart of Accounts is the categorized list of all the financial transactions in your business.
Example for a food startup:
| Category | Account Examples |
| Revenue | Online sales, retail sales, wholesale |
| COGS | Ingredients, packaging, co-packing |
| Expenses (OPEX) | Rent, salaries, marketing, transport |
| Assets | Cash, kitchen equipment, inventory |
| Liabilities | Supplier payables, loans |
| Equity | Owner investment, retained earnings |
You can set this up in accounting tools like QuickBooks, Xero, or even a Google Sheet to begin with.
5. Track the 3 Key Financial Statements
Your financial health is told through 3 core reports:
1. Income Statement (Profit & Loss)
Shows how much you earned and spent during a time period.
Example:
| Item | Amount (AED) |
| Revenue | 50,000 |
| COGS | 20,000 |
| Gross Profit | 30,000 |
| Expenses | 15,000 |
| Net Profit | 15,000 |
2. Balance Sheet
Shows your financial position at a point in time (assets, liabilities, equity).
3. Cash Flow Statement
Shows how cash moves in and out. This is vital in food startups with perishable goods and payment delays.
6. Practical Example: UAE Vegan Sauce Startup
A plant-based sauce startup in the UAE sold through markets and an online store.
Problem: The founder was profitable on paper but constantly low on cash.
Root Cause: Late payments from a B2B client (net 60) and bulk packaging purchase upfront.
Fix: They began tracking receivables and added a 20% down payment rule for wholesale orders. Their cash flow stabilized within two months.
7. Tools You Can Start With
You don’t need fancy tools from Day 1. Start lean:
| Tool | Use |
| Google Sheets | Track income, expenses, inventory manually |
| Wave (Free) | Invoicing, accounting for small startups |
| QuickBooks/Xero | Full accounting, great for scaling |
| Zoho Books | Local-friendly for MENA region |
Outsource bookkeeping quarterly or monthly once revenue grows.
8. Common Mistakes Food Startups Make
❌ Mixing personal and business money
❌ Ignoring inventory in accounting
❌ Not tracking COGS correctly
❌ Confusing profit with cash
❌ No recordkeeping (makes audit/tax season painful)
❌ Using the wrong pricing because of hidden costs
Tip: Open a separate business bank account. Use accounting from Day 1—even if you sell just 100 jars a month.
9. When to Bring in Experts
- You’re applying for funding or a bank loan
- You’re VAT-registered and need to file
- You need investor reports
- Your sales exceed AED 300,000–500,000/year
At FoodResso, we help startups build simple, affordable accounting systems with real training—not just handing off spreadsheets.
10. What to Do Next
- ✅ Choose a basic accounting tool
- ✅ Build your first Chart of Accounts
- ✅ Start monthly income/expense tracking
- ✅ Separate personal and business accounts
- ✅ Forecast your cash flow
- ✅ Schedule time monthly to review your numbers
- ✅ Ask for help when needed (seriously—it pays off)
Final Thoughts
If you don’t know your numbers, you can’t grow your business—no matter how great your hummus or kombucha tastes.
Think of accounting as your business’s dashboard. You don’t need to be a finance expert, but you must know where you’re going and whether your tank is full.
Need help building a basic financial dashboard or setting up your books?
Contact FoodResso. We’ll help you get started right.