Restaurant Employee Tip Tracking Through A Point Of Sale System

Jerry Wilson

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The History Of Restaurant Employee Tip Handling

No one knows when tipping began. But we do know that in the 1980's the IRS levied new regulations on restaurant owners to track the tips received by the employees of the restaurant.

The magic number of 8% became the benchmark for servers and waiters to declare as their tipped earned. Not because it was accurate. Rather, because it was the minimum amount allowed by the IRS.

The trick is this. Tipped employees in restaurants are generally not paid minimum wage. The amount varies from state to state but it runs between $2.15 to $3.15 per hour. The IRS assumes that the tips received will make up the difference between this low hourly amount and the true minimum wage that is currently $5.15 per hour. If this is not the case, then it is up to the restaurant owner to make up the difference between what the tipped employee earned + declared tips and minimum wage. This makes accurate tip declaration, tracking and reporting a vital aspect of running a restaurant.

The Need For Restaurant Employee Tip Handling

You need a employee time clock system that recognizes tipped employees, tracks their individual sales, any charge tips collected and requires them to declare cash tips at the end of their shift.

You also need a employee time clock system that can handle tip sharing, tip pooling and tip out to bus help, bartenders and other servers.

You need a employee time clock system that will track the hours worked and tips collected and recognize problems with employees not declaring enough tips to meet the minimum wage requirements.

The Solution Of Restaurant Employee Tip Handling

Some point of sale software products have tip tracking built into their time in attendance module. Once you set an employee as a tipped employee the system will require tip declaration prior to clock out.

Servers and waiters who ring sales will have their total sales tracked. Tips collected through credit card sales are tracked and shown on the server closeout report. Prior to clock out the server/waiter will be shown their total sales, the charge tips collected and then asked to declare their cash tips.

Some point of sale products do allow for programming flexibility with this feature:

You may change the minimum declaration from the default of 8%.
You may change the requirement to declare tips at clock out.
You may opt to have the system print a chit with their tips shown.
You may opt to not show charge tips on the declaration screen.

The Benefit Of Restaurant Employee Tip Handling To You

How do you measure the amount of relief a person can have knowing that your point of sale system is enforcing tip regulations levied by the IRS? Not to mention the mass amount of time savings in tracking declared tips, charge tips and hour worked for every tipped employee.

This is one headache you don't want to have to deal with. If you have tipped employees you need a good point of sale system with tip tracking and time and attendance.

About the Author

Jerry D. Wilson is Director of Internet Sales for DirecTouch Restaurant Point of Sale. With over 25 years of hospitality point of sale experience, he has written several articles explaining the benefits of touch screen and retail point of sale software. Please visit DirecTouch Do It Yourself Restaurant Point of Sale or DirectRetail Do It Yourself Retail Point of Sale for more information.


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