Cake Shop Chart of Accounts - Free sample chart of accounts for a cake shop

Cake shop chart of accounts by benchmark ledger solutions

A chart of accounts is the foundation of accurate bookkeeping for any small business, but it is especially important for a cake shop. Cake shops rely on consistent ingredient costs, clear pricing decisions, strong cash flow, and reliable financial information to stay profitable. A well-structured chart of accounts organises every dollar that moves through the business and helps owners understand exactly where money is earned and where it is spent.

For many bakery owners, bookkeeping feels complicated because they operate with both retail and production activities. Ingredients, equipment, labour, and sales all flow through the books in different ways. A thoughtful chart of accounts brings clarity, supports better decision-making, and makes monthly reconciliation and tax preparation much easier.

Below are the core account categories a local cake shop in West Michigan should consider using.

Income Accounts

Income accounts track the different ways your cake shop earns money. Separating income types helps you identify your most profitable products and sales channels.

Cake Sales: This includes custom cakes, wedding cakes, and speciality orders. Keeping this category separate helps you track which custom products drive the most revenue.

Cupcake Sales: If cupcakes are sold individually or in small packs, this category shows how these lower-priced items contribute to overall income.

Pastry and Dessert Sales: For shops offering brownies, cookies, or dessert bars, this category captures all additional baked items.

Retail Sales: Covers packaged goods, seasonal treats, cake toppers, candles, or small merchandise.

Catering and Event Income: Useful for large events or corporate orders. Tracking this separately helps you understand the value of catering in your business model.

Delivery Fees: If you charge for delivery, keep it separate so you can see how it offsets transportation costs.

Cost of Goods Sold

Cost of goods sold reflects the direct costs required to make your cakes and pastries. Accurate tracking helps you understand your true profit margins.

Ingredients: This includes flour, sugar, eggs, butter, milk, spices, chocolate, fillings, fondant, and frosting supplies. Breaking this into a single category is fine for most cake shops, but high-volume shops may benefit from subcategories such as dairy or chocolate.

Packaging: Cake boxes, cupcake boxes, parchment sheets, labels, and decorative bags. Keeping this separate helps you measure how packaging costs impact final pricing.

Decorations and Toppers: Sprinkles, edible glitter, cake toppers, ribbons, inserts, and themed decorations.

Direct Labour: Covers staff who are directly involved in baking and decorating. If the owner does the baking, this account can track the cost of any additional bakers or decorators.

White tiered cake with berries

Operating Expenses

Operating expenses support daily business operations and ensure the cake shop runs smoothly. These are not direct production costs, but they impact cash flow and profitability.

Rent or Mortgage Expense: For your bakery location.

Utilities: Electricity, gas, water, and internet. Accurate tracking helps you understand seasonal changes in cost.

Equipment Maintenance: Repairs and upkeep for mixers, ovens, refrigerators, and display cases.

Small Tools and Supplies: Piping bags, spatulas, measuring supplies, cake stands, and items that wear out or need replacement.

Point of Sale System: Fees for your register, merchant services, or online payment platforms.

Marketing and Advertising: Covers promotions, social media ads, local event participation, and photography for menu items.

Delivery and Transportation: Fuel, vehicle maintenance, and mileage for delivering cakes.

Cleaning and Sanitation: Cleaning supplies, dish detergents, gloves, and health standard items.

Office Supplies: Printer ink, paper, pens, and other administrative materials.

Payroll and Contractor Costs

If your cake shop has employees, this section helps you track payroll accurately.

Employee Wages: Covers all front counter staff, bakers, decorators, and part-time employees.

Payroll Taxes: Federal and state payroll tax obligations.

Contractor Payments: If you occasionally hire freelance decorators or delivery drivers, track their payments here.

Fixed Assets

Fixed assets include the larger long-term investments your bakery depends on.

Ovens and Kitchen Equipment: Capital purchases that last more than one year.

Furniture and Fixtures: Display cases, shelving, seating, and work tables.

Leasehold Improvements: Renovations or updates made to your bakery space.

Tip: These assets are typically depreciated over time. Keeping them organised helps during tax preparation.

Liability Accounts

Liabilities track the money your bakery owes.

Business Credit Card Payable: Tracks outstanding balances.

Loans Payable: Any business loans for equipment or expansion.

Sales Tax Payable: Required for Michigan businesses. Keeping this separate ensures you are ready for monthly or quarterly filings.

Owner Equity

Owner equity reflects the personal investment you have put into the bakery.

Owner Contribution: Funds you deposit to support the business.

Owner Draw: Money taken out for personal use. Tracking this prevents confusion between personal and business finances.

Cake shop with a display full of cakes

Final Thoughts

A clear chart of accounts creates accurate records, steady cash flow, and reliable financial reports. For a cake shop, it helps you track ingredient costs, identify best-selling products, price items correctly, and stay tax-ready all year.

For many bakery owners, setting up a chart of accounts can feel overwhelming, but it is one of the most valuable steps you can take to strengthen your business. Benchmark Ledger Solutions can help you build a clean, organised bookkeeping system so you can focus on creating cakes your community loves while knowing your financial foundation is strong and accurate.