How it runs for restaurants and hospitality businesses
After the run we book the journal by department and location, reconcile the clearing account, and reconcile tips paid to the tip liability.
What is payroll processing outsourcing?
Payroll processing outsourcing means a remote team prepares each pay run inside your payroll software: reconciling hours, entering changes, checking deductions and producing the run for the employer to approve. The employer keeps the payroll account, the bank authority and the legal responsibility. The provider posts the payroll journal and reconciles it, so payroll and the books agree.
What we handle for restaurants and hospitality businesses
- Import hours from the POS or 7shifts timeclock and check overtime across locations
- Load card tips and tip-pool allocations from the POS tip report each pay period
- Confirm tip-credit employees reached the full minimum wage every workweek
- Book payroll journals by department and location and reconcile the clearing account
- Reconcile tips paid through payroll to the tip liability and keep FICA tip credit workpapers
The KPI that matters here
Hours, tips and tip-pool allocations reviewed before every run, with the journal posted and the tip liability reconciled within two business days.
Restaurants compliance notes
Tip reporting and tip credits
Employees must report cash and card tips to the employer, the employer withholds payroll taxes on reported tips, and large food and beverage establishments file Form 8027 annually. Where the restaurant takes a tip credit against minimum wage under the FLSA, the wage records must show that tips brought each employee to the full minimum. We reconcile POS tips to payroll and keep the workpapers; your payroll provider and CPA handle filings.
Sales tax and local meal taxes
Restaurant sales are taxable in most US states, many cities and counties add a meal or hospitality tax, and rules differ for catering, delivery, alcohol and service charges. We reconcile tax collected in the POS to the ledger by jurisdiction each month, prepare the workings for your filing, and flag rate changes or new locations so nothing is missed.
Daily cash and deposit controls
Cash-heavy service creates the need for a daily cash count, a deposit log and a documented over-and-short account. We reconcile the counted cash per shift to the POS cash tender, match deposits to the log, and report over-and-short by location and manager so problems surface within days rather than at year-end.
Alcohol, franchise and lease reporting
Liquor license reporting, franchisor royalty and marketing-fund reports based on gross sales, and percentage-rent clauses in leases all depend on POS sales figures that tie to the ledger. We prepare the sales schedules these reports need from reconciled numbers and keep the supporting Z-reports on file.
Restaurants software we work in
- Square
- QuickBooks Online
- Xero
- Gusto
- Bill.com
- Toast
- Restaurant365
- MarginEdge
- 7shifts
- All 50 platforms
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Frequently asked questions
How do you handle tip pools and tip-outs in payroll?
Card tips from the POS tip report are allocated according to your written tip-pool policy, for example a percentage of server tips to bussers and bartenders, and loaded to each employee's pay so taxes are withheld correctly. Cash tips reported by staff are added for withholding. The total loaded is reconciled to the tip liability so it clears each period.
What is the FICA tip credit and how do you support it?
Food and beverage employers may claim a credit for the employer share of Social Security and Medicare taxes paid on tips above the amount needed to reach the federal minimum wage. Your CPA claims it on the return; we keep the workpapers by reconciling reported tips to payroll and the POS each period so the figures are supported when the return is prepared.
Do you process payroll yourselves or support our provider?
We build and check the run inside your payroll provider, you approve it, and the provider pays your staff and remits the taxes. We never move money. Our contribution is the hours and tips assembly, overtime and minimum-wage checks, the journal by location, the clearing-account reconciliation and the tie-out of quarterly filings to the ledger.
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