How to do restaurants payroll
National Restaurant Association said in its report that around 14.7 million people are working in the restaurant industry. Overall, 10% of the workforce in the USA is made of restaurant employees, and most of these employees are part-time or temporary employees. According to the stats, only 10% of the restaurant employees get regular salaries. The turn over rate of the restaurant industry is among the highest, and the process of rehiring and retraining the new employees take a lot of energy, time, and money.
The importance of labor cost
The restaurant industry has multiple positions and wages based on the nature of the employment. Thus the payroll system you are using must be able to include different rates of the salaries as per the requirement and post. It is usual for a restaurant to train the employees for multiple posts so that when required, the employees can handle different positions in different shift schedules.o
Most of the restaurants operate seven days a week. Also, there are no fix hours for the employees, especially when they are hire on an hourly basis. Most of the restaurant staff are students who are working part-time to get money for their education, and regular office hours are not possible for them. The restaurant staff often does not work in continuous shifts. They split the shifts and accommodate different schedules of the restaurant based on the footfall, events, etc.
All these irregularities in the working hours make it even more challenging to track the working hours of the employees, especially when you have a significant workforce. Imagine in a restaurant with 50+ employees if two or three employees forget to enter their clock in and clock out time, the process of paying them for the hours they spent will become even more difficult. Inaccurate time tracking is among the most common problems that is face by restaurant employers.
Understand the employee compliance
As you know, restaurants are busies in some months while some months see lesser footfall. The staff that generally works on an hourly basis and listed as part-time employees often get hired as full-time employees for the busy months. You need to take care of the benefits under the Affordable Care Act to avoid the penalties.
Also, it is crucial to track tips, especially if you are in states like Florida, Massachusetts, and Arizona. You can use the tips to match the minimum requirement of the wages. Running a restaurant is, in itself, a hard job. Managing Restaurant Payroll is a whole other world of problems. Thus it is advised to hire reliable and experienced payroll providers to manage the payrolls for your employees.
How does restaurant payroll work?
When you are processing payrolls for the restaurants, there are a lot of things to consider. If you do not know the specific laws related to the restaurant payroll, you can get confused with the payroll process very smoothly. For example, in the restaurant industry, those employees who get more than $30 in tips every month are called tipped employees. If they are earning enough tips to match the applicable minimum wage law, in some states, you are allowed to pay such employees as low as $2.13 per hour. You need to keep in mind that those employees who are getting tips totaling more than $20 per month are required to report them accurately at the right time. In case they fail to do so, you may end up getting a tax bill that you need to take care of.
Also, it is your responsibility to inform your new employees clearly how much you are going to pay in the wages and if there is any top program in your restaurant. The tip programs are the programs where all the tips collected are pooled in one place and then distributed equally among the employees. In case your restaurant policy requires the staff to share the tips with the backstage employees of the restaurant, you will have to pay the full minimum wage to the employee. In this case, no discounted rates will be applicable. Also, it is your responsibility to withhold and pay taxes on the tips. Please note that you cannot deduct these taxes from the paycheck.
To make sure there is no confusion in the payroll process, you should refer to the United States Department of Labor (DOL) website. Also, make sure to check the website regularly as the government often update the laws related to minimum wages, etc. Some states are more frequent in changing these laws in comparison to other states.
In case it is getting harder for you to manage the payroll process, you can always hire payroll providers to manage the payroll system at your restaurant. In such a case, you will have ample time to understand the flaws in other departments of your restaurant and take action to rectify them.
Who needs to learn restaurant payroll?
For every restaurant owner who handles the pay of the restaurant, employers should learn everything about restaurant payroll. In case you are using payroll vendors to take care of the payroll process, even then, you should have at least the basic knowledge about the laws involved in the payroll. You should be aware of the responsibilities you have as a business owner so that if something is not making sense, you can dig deeper and find a solution.
People who should have some idea about the rules and regulations involved in restaurant payroll include owners of the restaurant, payroll administrators, HR department of the restaurant, and tipped and non-tipped employees of the restaurant. For everyone involved in the process of making the restaurant a success should be aware of what they are getting or paying and what they should be getting or paying. The employers and the HR department should be well versed with the laws involved in restaurant payrolls as it is their responsibility to inform the employee about the rights and duties of the job.
How to choose a payroll service?
While choosing the payroll providers for your restaurant, you should be aware of the fact that not all service providers work at the same level. Every business has different requirements, and it is essential to choose the right service to provide to ensure you do not face any problems from the IRS. Some of the aspects of the services that you should consider while choosing a payroll service are as follows:
- Features: The payroll vendors you are planning to choose should be able to handle the tax obligations correctly. Also, they should have multiple payment options. You should also check if the service provider is offering services such as payroll reports, compensation administration, different wage rates, unemployment insurance, and much more.
- Cost: One of the essential aspects that you should check is the cost of the service provider. The services vendor is providing should be affordable. You also need to make sure that you form a contract with the vendor to ensure you are safe on the legal end. There are payroll providers who work on a month-to-month basis while others work on a long-term contractual basis. You can choose the one who seems right and affordable for your business.
- Ease of use: The services should be easy to understand, and the vendor should be able to provide the services in the simplest possible manner. The system the vendor offers should be able to run payroll and add new employees in the system quickly and efficiently.
- Reputation: You should consider the reputation of the payroll vendors while choosing the services. Check online and offline reviews of the vendor before you finalize them.
- Support: The vendor should be able to provide support when required by your restaurant. Also, when you hire or fire new employees, the service provider should be able to include or remove the new employee in the system almost immediately.
Running a restaurant takes a lot of time, energy, and effort. Managing restaurant payroll is another level of workload which the owner often has to take. From hiring new employees, training them for different positions, managing different wages, guiding the employees about their rights and responsibilities, and issuing their payments on time while keeping track of the taxes to be paid are some of the responsibilities of the restaurant owners. All this can become stressful in busy months, and owners often make mistakes with payrolls that can cause long term troubles. Thus it is advised that you hire reliable payroll providers to manage the payment process. These payroll vendors will not only manage the payrolls for you but will also guide the employees about their rights and responsibilities.