7 Things You Need To Know About Restaurant Payroll

Running a restaurant business means catering to the needs of employees and customers all at once. When you have a running and growing restaurant business and your employee clan is also growing, you might feel the need to set a payroll software for convenience and better functioning. It is okay if you are feeling puzzled and unable to get through the beginning point.

Implementing and running such software cannot be easy and can pose challenges from time to time. Both new and experienced eatery owners tend to face these issues, and that’s why you should explore something about restaurant payroll management for a better experience.

Payroll Meaning

Eatery employees get their paycheck after the business calculations based on the specific laws of the restaurant industry. Also, the employees receive tips which are considered for the calculations. The laws cater to additional requirements like overtime, minimum wages, and others like working in different chains in different cities. All these things are mentioned in a paystub that the employee gets.

Hence, it is always recommended to use software for accuracy and quicker functioning.

Now, when you are through with the meaning of restaurant payroll, there are some things that you need to know about such a system or software. So, here you go.

• Payment Scheduling

Running payroll for your employees is at your discretion. As an owner, you can decide with your business partners or meet with your employees to know their suitability. It gives an open forum for discussion, exchanging expectations, and maintaining a healthy environment that adds to the employee retention quotient. The common payment time frame is bi-weekly or by the end or beginning of each month.

• Payroll Percentage

There can be a lot of questions related to the average labor cost in the kitchen, inventory, storage, area, sitting, and much more. All these things need to be considered while calculating the restaurant payroll.

All eateries are different in the form of their location, menu, ideas, and serving. All this adds to their USP, but exceptions exist in each case. But, in each situation, you should know the typical percentage for evaluating the restaurant’s financial performance.

Let’s take a basic example. The restaurant’s prime cost is food, beverage, and labor costs should be between 55 to 65% of the sales. If you have a high-end chain, the rent and advertising can go high, which will be a major chunk of the prime cost. After all these deductions, the leftover can be considered the profit.

• Employee Classification

Some employees sign up for overtime, and others don’t. So, you should check for proper employee classification while deciding to move forward with a restaurant payroll system. The wrong way of doing the same can affect the overall calculations. Keep a check on the prevailing standards relegated to wage regulation and the bar on the minimum wages.

Also, if there are employees that are paid on an hourly basis, you should keep a check on the minimum requirements. Also, the classification should include exemptions based on factors like performance management and administrative or professional duties.

• Impact Of Tips

Tipped employee classification should be different as tips are directly responsible for impacting the minimum wage. The rule applies that any restaurant employee who receives more than the set tip standard in the form of gratuity from sources like customers or guests will be categorized as a tipped employee. Tips become a part of the salaries and are considered under the tip credits head. The main idea behind introducing the tip credits is to ensure that the restaurant owners correctly report the tips.

• Tipping Rules And Regulations

The tale of restaurant employee tips does not end here. The base amount is set, and if the tip amount crosses the same, it shall become taxable. As restaurant owners, you need to keep a record of the tips and check for their treatment under income tax and other country laws. Also, there can be forms to be filled out regarding the same, along with the employee’s information. You should cater to all these things and use them while having a payroll system.

You can think about investing in a tip reporting system for better clarity. You can ask your tipped employees to ping their reports in this system, which helps ensure complete compliance with the minimum wage rate and related laws.

• Deadline And Its Importance

Payroll taxes for a restaurant business foresee deadlines as an important feature. If you are not meeting the penalties, your business will be charged with penalties, charges, and hefty interest percentage, and in the worst case, you can be imprisoned for violating the law. On the other hand, seeking timely reports adds to your value and morale. Hence, you should check the deadlines and generate results through your payroll software to avoid unnecessary trouble and fines.

You can seek chances for business automation that helps in reducing the possibility of committing mistakes or passing deadlines. Payroll software should be employed with a time tracker that gives you timely reminders regarding the upcoming deadlines so that you don’t miss anything important that can lead to losses.

• Payroll For Small Restaurant Businesses

It’s quite evident that all restaurant sizes won’t be the same. Also, implementing the payroll system will have different things for a small-sized restaurant business. Small restaurants have to focus on establishing their name in the industry. Hence, they can consider using the cloud to store the information and records of different pay periods. Accessing it through the cloud is easy, and you need not keep a check on them all the time.

A common recommendation for all restaurant businesses is that they should keep the records and wage details for two years.

Conclusion

In the end, it comes down to one point which is choosing the right restaurant payroll system and ensuring that it complies with the laws and regulations. Deadlines are never a matter of concern with the payroll system as they’ll do the needful to keep you and your restaurant business in a profitable position.