Restaurants
Restaurant Payroll and Tip Reporting
Restaurant payroll is one of the most error-prone parts of restaurant accounting. Between tip pooling, tip credit, overtime on tipped wages, Form 8027, and the FICA tip credit, owners need a payroll provider and CPA who understand the rules — federal and state.
What it covers
- Tip pooling and tip-out policies
- Tip credit eligibility by state
- Overtime calculation on tipped wages
- Service charges vs tips classification
- Form 8027 large food and beverage filing
- FICA tip credit on the business tax return
- Multi-state payroll for traveling staff
- Workers comp reporting on tipped wages
Who needs this
- Full-service restaurants and bars
- Hotels and resorts with F&B operations
- Multi-unit operators in multiple states
- Catering companies with event staff
- Owners switching POS or payroll systems
- Operators preparing for a DOL audit
How to choose a payroll partner
- Experience with restaurants specifically
- POS integration for hours and tips
- Comfort with tip credit and state-by-state rules
- Files Form 8027 and supports FICA tip credit
- Handles wage garnishments and certified payroll if needed
- Pricing per employee, not per pay run only
Frequently Asked Questions
What is the tip credit?
The federal tip credit lets employers pay tipped employees as little as $2.13 per hour as long as tips bring the employee up to at least the federal minimum wage. Many states require higher cash wages or disallow the credit entirely.
When is Form 8027 required?
Restaurants with more than 10 employees and that customarily receive tipping (large food and beverage establishments) must file Form 8027 annually to report receipts and tips.
What is the FICA tip credit?
IRS Form 8846 lets restaurant owners claim a credit for the employer share of Social Security and Medicare paid on reported tips above the federal minimum wage threshold. Many restaurants miss this credit.
Are service charges the same as tips?
No. Mandatory service charges are wages, not tips. They are subject to standard payroll taxes and do not qualify for tip credit or the FICA tip credit.
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