The Best Payroll Software for Restaurants in 2024

Payroll software isn’t one-size-fits-all. But the best payroll services for restaurants will handle all federal, state, and local taxes, keep you compliant with minimum wage, breaks, and overtime, and give you peace of mind that payroll is accurate and on time, every time. It should be able to grow as your business grows, all with a price tag that won’t break the bank.

So which one is right for your business? We’ve put together a handy guide to compare all the best payroll apps for restaurants to help you make the right choice.

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FAQs

Restaurant payroll software has to be fairly sophisticated in some ways, mostly because of the complexity of paying servers in the US. Tipping is considered income, so it has to be taxed. Additionally, tips can count toward a worker’s minimum wage requirements. Tipped employees can be paid less than the minimum wage, as long as the difference is made up by the tips they make.

As a result, the best payroll software for restaurants includes things like alerts about minimum wage earnings, or help finding tax credits with FICA tip credit reports. Good restaurant payroll services should also have powerful tipping tools, integrated time tracking and scheduling, and clock-in capabilities.

POS stands for point-of-sale, and these systems will be used for taking orders, accepting payments, tracking inventory, clocking in and out, and more. The best restaurant POS software gives you the power to connect the front and back of house and your back office while freeing you up to take care of your customers. Finding a payroll provider that integrates with your POS can eliminate manual entry while saving time and reducing errors.

Yes, employees must report tips to their employer. While credit card tips are automatically reported, cash tips must also be entered into the system, usually at the end of a shift or on a weekly basis. The Internal Revenue Service states all employees must:

  • Keep a record of all tips they earn
  • Report all tips they receive, both cash, and non-cash, to their employer in a calendar month. An exception is when the tip total is less than $20 per month, per employer.
  • Employees must also report all tips on their individual tax returns

The FICA tip credit is a tax incentive allowing certain businesses, particularly in the food industry, to offset Social Security and Medicare taxes on employee tips. Employers can claim a credit for their portion of these taxes on tips exceeding the federal minimum wage for tipped employees. To qualify, businesses must operate in a tipping industry, and employees must regularly receive tips. Keeping accurate records is crucial for claiming this credit, which helps alleviate the tax burden on employers with tipped staff.

IRS Form 8846, also known as the “Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips,” is a tax form used by businesses in the food and beverage industry. This form allows eligible employers to claim a credit for the Social Security and Medicare taxes paid on tipped income above the federal minimum wage. It helps businesses offset some of the tax liabilities associated with employee tips, providing financial relief for those in industries where tipping is customary.

The federal minimum wage for tipped employees is $2.13, and $7.25 for non-tipped employees. Most states, however, have their own rates, and it varies on where you do business. If a worker’s combined wages and tips don’t meet the $7.25 minimum wage for the hours worked, you will have to add additional earnings known as a tip makeup to their paycheck. Gusto makes it easy to make sure you’re meeting minimum wage requirements with a built-in feature that automatically keeps you compliant.

Prices start at just $46/month

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