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Run the Payroll Fee Auditor →Blog · Payroll Management · Restaurant
Restaurants & Hospitality: Payroll Features Every Business Needs (2026)
Restaurants need payroll configured for tip credit and tip pooling, high turnover and multiple pay rates, pay codes that general-purpose software leaves to the customer to build. BEG runs restaurant payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Pay codes a restaurant cannot run without
Restaurants pay servers and line cooks on different bases, and the payroll system has to hold every one of them as its own pay code with the right tax and overtime treatment: tip credit and tip pooling, high turnover, multiple pay rates and split shift premiums. A generic setup collapses these into hourly and salary, and the errors show up in the regular rate, in year-end forms and in the first wage claim.
A tipped employee is one who customarily and regularly receives more than $30 a month in tips. An employer taking a tip credit must pay a direct cash wage of at least $2.13 per hour and may claim a tip credit of up to $5.12 per hour against the $7.25 federal minimum wage, and overtime for tipped employees must be calculated on the full $7.25 minimum wage, not the cash wage.
An employer that takes a tip credit may require a tip pool only among employees who customarily and regularly receive tips, such as servers, bussers and service bartenders. An employer that pays a full cash wage of at least $7.25 may include cooks and dishwashers in a mandatory pool, but managers and supervisors may not receive tips from any pool.
Tax handling specific to restaurants
An employer that normally employed more than 10 employees on a typical business day in the preceding calendar year at a food or beverage operation where tipping is customary must file Form 8027 for each such establishment. If total reported tips for a payroll period are less than 8 percent of gross receipts, the shortfall must be allocated among directly tipped employees and shown in box 8 of Form W-2.
What is configured before the first run
At implementation every pay structure above is built as a code with its own taxability, its own overtime treatment and its own W-2 mapping, and the exemption status of servers and line cooks is documented against the rule that supports it. That is the difference between software with the features and a payroll that uses them correctly.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- A tipped employee is one who customarily and regularly receives more than $30 a month in tips. An employer taking a tip credit must pay a direct cash wage of at least $2.13 per hour and may claim a tip credit of up to $5.12 per hour against the $7.25 federal minimum wage, and overtime for tipped employees must be calculated on the full $7.25 minimum wage, not the cash wage. [DOL Fact Sheet #15]
- An employer that takes a tip credit may require a tip pool only among employees who customarily and regularly receive tips, such as servers, bussers and service bartenders. An employer that pays a full cash wage of at least $7.25 may include cooks and dishwashers in a mandatory pool, but managers and supervisors may not receive tips from any pool. [DOL Fact Sheet #15]
- An employer that normally employed more than 10 employees on a typical business day in the preceding calendar year at a food or beverage operation where tipping is customary must file Form 8027 for each such establishment. If total reported tips for a payroll period are less than 8 percent of gross receipts, the shortfall must be allocated among directly tipped employees and shown in box 8 of Form W-2. [IRS Instructions for Form 8027 (2025)]
Read the full guide to every managed payroll feature, explained, and the rest of the restaurant payroll library.
Managed Payroll, Handled.
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Frequently Asked Questions
How do you handle tip credit for tipped employees?
Tip credit is configured per state. We calculate whether each employee received enough tips to bring total compensation to minimum wage per pay period. Where no tip credit exists, tipped employees are paid at full minimum wage.
How do you handle multiple pay rates for the same employee?
An employee working as a server at one rate and a shift supervisor at a different rate is set up with dual rate codes. Overtime is calculated at the blended rate across all hours worked in the week.
How do you handle tip pooling under FLSA?
Post-2018, tip pools can include back-of-house employees in non-tip-credit states. We track pool contributions and distributions and produce the required documentation.
What does BEG charge for restaurant payroll?
Restaurant payroll runs at $45 per employee per month. Tip credit tracking, tip pooling distribution, and multi-rate pay are all included. For a 25-employee restaurant, that is $1,125 per month.
What does managed payroll cost for a restaurant?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Tip credit and tip pooling, high turnover and multiple pay rates are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Restaurants & Hospitality. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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