The Best Payroll Software For Restaurants 2023

Once you’ve got your restaurant payroll process set up and ready to go, it’s time to start crunching the numbers. Regardless of the process you choose, you’ll need to keep a record of tips received so you can produce an accurate restaurant payroll. Anyone who regularly receives more than $30 per month in tips is considered a tipped employee. More recently, Running Law Firm Bookkeeping: Consider the Industry Specifics in the Detailed Guide the federal government has allowed other types of workers, such as janitors and dishwashers, to begin receiving tips through tip pools, provided certain requirements are met. Some states, however, still restrict tip pooling agreements only to those who customarily receive tips. Are you running a seasonal restaurant that works with contract employees?

Once you gather all of the forms you need from your employee(s), keep them secure and easily accessible by storing them in your payroll records. You may also need to do some other tasks, like get workers’ compensation insurance, before you can get started running payroll. Calculating restaurant payroll can be complicated – but it’s important. The more efficiently you run your payroll, the more time you’ll have to put toward running your restaurant. From stocking ingredients to cleaning the floors, there are so many demands when owning a restaurant, let alone a successful one. Setting up and running the restaurant’s payroll is as crucial a component as it is complicated, but that doesn’t mean owners have to manage it alone.

Calculate gross wages

One factor that can particularly impact this setup is the fact it will only apply to base wages the employer provides directly to the employee. Employees who work for tips (i.e., Tipped Employees) will have extra earnings to take home every shift and they’re often in cash. Other relevant legislation restaurant owners should know include the Occupational Safety and Health Act (OSHA), Employee Retirement Income Security Act (ERISA), and Family and Medical Leave Act (FMLA). OSHA focuses on maintaining a safe working environment for employees, while ERISA regulates employee benefit plans. Finally, FMLA mandates organizations with 50+ employees to provide said employees with protected leave in case of illness or the illness of a spouse, parent, or child.

Keep in mind that different positions within your business will have different rates of workers’ compensation and will directly affect the report you produce. In some states, the employees themselves purchase this type of insurance through a private carrier. In other states, though, the business purchases a package of workers’ compensation insurance for all of their employees. A third state payroll report that may be mandatory in your area is the business’s workers’ compensation numbers.

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If you are taking a tip credit, your tipped employees will need to report their tips to you on a daily basis in order to ensure proper payment. Running payroll for the first time is always challenging, but running restaurant payroll can be particularly challenging. In fact, even experienced restaurant owners often struggle with restaurant payroll management. Gusto is an online payroll and benefits management platform with a self-service employee portal. It facilitates automated payroll for employees and contractors and files and pays taxes and files W-2 and 1099 forms automatically in all 50 states. You can also administer benefits, such as health insurance, retirement plans and custom benefits.

• All plans support direct deposit, online pay stubs, and multiple pay rates.
• However, after you’ve opened multiple locations, it often makes sense to hire a full time payroll expert.
• Today modern software can collect required payroll information, track employee hours, and calculate pay and taxes.
• Give your restaurant the team management tools they need to be successful.
• A tip credit says you can pay a server, a tipped employee, as low as $2.13/hour as long as they get tips that take them over minimum wage in that shift.

Generally, a tipped employees is someone who regularly and customarily receives more than $30 per month in tips. At the state level, most restaurants will need to file similar forms regarding withheld payroll taxes, unemployment taxes, and workers compensation insurance. It’s very common for these forms to be submitted quarterly, but their names and specific due dates can vary so it’s important for restaurant owners to familiarize themselves with their state’s requirements . The specific amounts due for these taxes will also vary based on the employee’s earning that pay period both in direct wages and tips. The IRS considers tips to be taxable income and the total income from tips reported to an employer must equal at least 8% of the business’ total receipts for that pay period. Restaurant employees can sometimes perform multiple roles that have different wage rates.