What is tip pooling?

Tip pooling is a way to share tips among tipped employees. Basically, tipped employees put part of their tips in a pool and, at the end of each shift, the money is split between  each tipped employee who worked during that time.

Now, tip pooling can be tricky, as many states have strict laws on the matter. Be sure to check with your state to see if tip pooling is allowed and if there are any restrictions.

This article provides general information and shouldn’t be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.