The payroll processing servicesof a company refer to paying employees, calculating their salaries, benefits, taxes, etc. It is a process that requires considerable time, effort, and money to stay legally compliant and remove the layer of burden on themselves. When we talk about restaurant payroll, we need to consider several industry-specific laws. The complexity in a restaurant's payroll enhances when we factor in cash and credit tips from the customers and the tax compliance needs of the company. Every employee wants to maximize their income with tips, whereas a company wants to keep their employees happy while complying with the legal authorities.

The different types of tips and service charges in a restaurant industry include:

Wages:

Wages form the primary portion of payroll processing services. It is the amount paid for the work or services by the employee for the company as an hourly charge. It may or may not be lower than the wage rate; you should get the difference in tips if it is.

Tips:

These are voluntary payments made by customers to honor the services received by the employee in addition to the bill paid by them. A company's payroll processing services require adding if the employee receives cash tips exceeding a specific figure. It is to charge tax on the amount received in excess.

Service charges:

These are regulated, non-voluntary tips charged by restaurants from the customers in the bill itself. The  budgeting and forecasting require their tax treatment to be like wages.

Credit card tips:

Sometimes a customer may pay tips through credit card and meal costs. Employers can pay this tip amount to the employees in the following payroll processing services schedule. There might be deductions in the processing fees that vary according to the state.

Non-cash tips:

While the employer must keep track of the non-cash tips received by the employees like game tickets, gifts, etc., the employees must pay income tax on them as per the payroll processing services regulations.

Tip-pooling:

The employees who fall under the tipped employees must create a pool of funds using their tips to distribute the amount among themselves evenly. However, if they somehow connect to a managerial position, they cannot become a part of this practice.