PAYROLL SERVICES FOR RESTAURANTS
OUTSOURCING PAYROLL FOR YOUR RESTAURANT TO SAVE YOU TIME AND HELP AVOID HEFTY FINES
Easy Payroll Processing For Your Restaurant
Whether you're a seasoned restaurateur with multiple locations or just opening your first cafe, our payroll solutions will simplify your business. Restaurant payrolls are governed by a unique set of employment and tax laws that typically do not apply to other industries. As such, it is important to ensure your payroll partner is prepared to protect your business and it's employees.
Our team brings deep knowledge of the restaurant industry matched with customized software solutions. We work with each group to design an efficient, cost effective solution to ensure you are protected from strict regulations and avoid hefty penalties and fines.
Full payroll & tax filing: federal, state & local
Intuitive online payroll portals
Employee self service
Flexible payment options: direct deposit, onsite printing or live check delivery
Labor law poster compliance
Time keeping & attendance
General ledger interface
POS system integration
FICA Tip Credit Reporting
New hire reporting
Worker's compensation pay by pay
Expert customer service
Restaurant Tax Tips - Reporting Income
The IRS requires employees to report all tips earned to their employer. As an employer, you must ensure that the total tip income reported during any pay period is, at a minimum, equal to 8% of your total receipts for that pay period.
Taxable income is governed by the Tax Equity and Fiscal Responsibility Act (TEFRA) and Tip Reporting and Alternative Commitment (TRAC). It is important to note that certain types of "tips" should be treated differently depending on how they are earned. For example, automatic gratuities (such at 18% on large groups) are to be counted as revenue to the restaurant, rather than tips for the servers. The restaurant would then be responsible for the associated sales tax. Service charges added to a customer's check and divided among the employees should be treated as wages.
While reporting tips is bound to increase the tax liability for employees and employers, the IRS has designed a tax incentive for restaurants to comply with this requirement. The FICA Tip Credit can provide huge tax savings for restaurants by simply following the law.
The FICA Tip Credit
Federal Insurance Contribution Act (FICA) is a U.S. federal payroll tax that consists of Social Security Tax and Medicare Tax. As discussed in 'Restaurant Tax Tips' section above, tips that your restaurant's employees receive from customers must be recorded as taxable income - this applies to both cash and credit card tips.
A tax credit (different from a tax deduction) is a dollar for dollar reduction of your taxes due. The goal of the FICA Tip Credit is to incentivize restaurant owners to report staff tip earnings. By doing so, the employer will receive a tax credit on FICA taxes paid on wages the exceed the minimum wage! The FICA Tip Credit is reported on IRS Form 8846 and should be filed by your tax accountant when the business tax returns are submitted. While this may be a bit confusing at first read, just know that this is a tremendous benefit for every food establishment that qualifies for the FICA Tip Tax Credit.
You should qualify if you meet both of the following conditions:
You had employees who received tips from customers for providing, delivering, or serving food or beverages for consumption if tipping of employees for delivering or serving food or beverages is customary.
During the tax year, you paid or incurred employer social security and Medicare taxes on those tips.
We are available for complimentary consultations to discuss how our payroll solutions can simplify your payroll processing and ensure your FICA Tip Credit is reported correctly to your accountant.
Additional Considerations for Restaurant Payroll
There are many other considerations that are unique to restaurants that may complicate your ongoing processes and procedures. Some of these challenges are logistical hurdles due to the nature of the business, while others may be due to other federal or state specific regulations. Our knowledgeable team is equipped to advise you on best practices. A few more items that are frequently encountered in the restaurant space are:
Various pay rates for each employee (Ie. Some hours worked as a waiter, some as a hostess)
Pay frequency requirements for hourly versus salaried employees
Employees without bank accounts
Pay statement requirement - rules vary by state, but are not required at the federal level
New hire reporting and garnishment payments
If there are additional topics that you are uncertain about, please contact our team of experts!
Still Have Questions? Let's Talk.
Don't let the complexities of managing your back office distract you from running the business. PaySteady delivers easy-to-use payroll technology coupled with hands on customer service to ensure paydays are made simple and hassle free.