A Beginner’s Guide to Running Restaurant Payroll

payroll for restaurants

If you don’t pay them, they’ll stop showing up to work, and you won’t have anybody to serve up the hospitality your customers expect. Millions of companies use Square to take payments, manage staff, and conduct business in-store and online. You will also need ID numbers for the state, territory, or district in which your restaurant is running. Check each state’s department of labor and department of revenue for further details on business registration.

payroll for restaurants

What you get out of ADP will depend on what plan you choose, but ADP offers just about anything you could possibly want from your payroll software. Restaurants tend to run on thin margins, so using Square for restaurants can help to reduce payroll costs. Even if your restaurant doesn’t use Square POS, Square Payroll still holds its own when put up against other software for smaller to mid-sized restaurants. Employees that earn less than $20 in tips are not required to report their tips to their employer for that month. However, when the total tips are greater than $20, employees must report tips monthly.

Credit Card Tips

Employees will simply need to provide their Automated Clearing House (ACH) information, which includes the routing number for their financial institution and their account number within that institution. law firm bookkeeping Forty-three of the 50 states require payroll reports related to income tax and state unemployment taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not.

  • Half of payroll taxes (7.65%) are remitted directly by employers, while the other half (7.65%) are taken out of workers’ paychecks.
  • The maximum tip credit allowed under federal law is $5.12 per hour.
  • Here are some of the most common federal payroll reports for businesses of all types.
  • Single-tier pricing keeps it affordable, transparent and simple to use.
  • Restaurant payroll software differs when it comes to payment functionality.

However, if you’re a small restaurant that’s running on a shoestring budget, then Payroll4Free can be worth a try. If you’re looking for a free payroll solution, you can use software like Payroll4Free. Once you’ve onboarded your employees and their paydays, you can be sure your payment calculations are error-free because of the software’s automated workflows and validation rules. If you run one of those, Restaurant365 helps you take care of more than just the basics, regardless if you’re an independent restaurant, a multi-concept restaurant, or even a franchisee group. The most convenient payment tier for your restaurant will depend on the features you’d like access to. You’ll have to pay a fee per employee regardless of the tier you choose.

How do I treat benefits and deductions at my restaurant?

This includes time cards that comply with FLSA timekeeping requirements. Payroll software can make this easier, as records are kept automatically. It’s crucial to be aware of the deadlines for depositing income taxes and payroll taxes – as you don’t want late penalties, interest charges or jail time for violating the IRS tax law. The Fair Labor Standards Act makes a distinction between non-tipped and tipped employees. The rule is that anyone who regularly receives more than $30 per month in gratuities (either from customers or fellow employees) is considered a tipped employee.

In terms of management wages, you generally would not want them to exceed 10% of your sales for either type of restaurant. It should also ensure accuracy and security so you can remain compliant with federal and state laws. Gusto’s budget-friendly plans, robust HR tools, and easy-to-use interface make it an ideal payroll software for restaurant owners. If you use the tip credit, make sure tipped employees’ wages meet the state minimum wage after tips. Otherwise your business will have to make up the difference out of pocket. Payroll software is an invaluable tool that helps automate payroll processing to save time and make sure you never miss a payday.

Benefits Administration

To receive a quote, you’ll need to complete a brief form about your business. While there are limited reporting templates, clients can create custom reports to fit their needs. Also, to date, insurance features are only available in 39 states. FreshBooks is relatively easy to set up and takes only a few minutes to start.

payroll for restaurants

From learning tip requirements to setting up a restaurant payroll solution, we’re here to help you become a pro at handling restaurant payroll. Setting up payroll for any small business is a large feat, but managing restaurant payroll is undeniably a complex process. There’s a lot you need to keep track of for payroll processing, but it’s crucial that you can pay your employees accurately and on time.