A Payroll Guide for Restaurant Owners


A thriving restaurant operates like a finely-tuned machine. Each employee carries out their specific tasks to keep the entire operation moving forward at a steady pace.

As a restaurant owner, you need to make sure you’re fully staffed so all the cogs in your machine keep moving. Depending on your restaurant, you might need to employ quite a few cooks, dishwashers, servers, bussers, bartenders, and other positions. And each employee will likely work different hours at varying pay rates, making payroll difficult.

In this blog post, we’ll provide tips for efficiently managing payroll in your restaurant.

You withhold and pay taxes for your employees

Withhold and paying taxes on behalf of your employees is one of your main responsibilities as an employer. Each new hire needs to complete the correct paperwork before they start so you can determine the right amount of taxes to withhold. As they work and earn income, you’ll need to collect their taxes and keep on-going and accurate records.

Tips are taxable income

While all businesses need to keep accurate employee tax records, it can be more difficult for restaurants since tips are considered taxable income. Your wait staff and bartenders need to declare what they earn in gratuities so none of their income goes unaccounted for.  

It’s good practice to have a straight-forward policy on how tips are managed in your restaurant. You can brief your staff members on the policy when they’re hired so they’re clear of the expectations from then on. You can learn more about how to manage and account for tips in your restaurant in this blog post.

Keeping the right employment records

You’ll find that keeping the right records on each employee makes managing payroll much easier. The forms they complete when hired, the amount in tips they report, and records for each pay run can all be stored in the cloud. Cloud document storage keeps your office free of clutter and makes it easy to find and access the right documents when you need them. When it comes time to file your taxes, you’ll be able to easily find the information you need instead of digging deep into a filing cabinet.

Use cloud payroll software

One of the best ways to simplify your payroll responsibilities is to implement cloud payroll software. Different cloud-based systems are able to connect and share data, automating many of your back office responsibilities.

In the case of payroll, each employee can enter their hours and the tips they earned into the system. The software will automatically arrange for each employee to be paid and update your staff and accounting records.

Does your restaurant need help managing payroll or implementing cloud payroll software? BookKeeping Express (BKE) can help!