Six Payroll Challenges For Small Restaurants
Managing a small restaurant is no easy feat. One would be dealing with several things all at once; coming up with strategies to drive sales, training employees on great customer service, and implementing customer reviews, and a more pressing issue: payroll processing.
Many small restaurant owners are having a difficult time meandering through the complexities of managing payroll, unlike other small businesses. You can’t afford to make mistakes while managing payroll. Mistakes often led to paying penalties which may affect your business.
You don’t want that.
In this article, we discuss some of the various payroll challenges for small restaurants and cafes.
Minimum Wage and Overtime.
Since 2009, the federal minimum wage has remained $7.25 per hour. However, states, cities, and counties have implemented a much higher minimum wage for employees. If the state and the federal minimum wage is different in the state your business is situated, you’d have to pay your employees a higher rate.
In the event that an employee exceeds 40 hours per week, he or she must be paid one and a half times more than their regular pay per hour.
When it comes to overtime, a lot of restaurant owners get it wrong. For some employers, calculating overtime fees of workers is still a challenge. There’s a seemingly overtime wage difference between tipped and untipped employees.
- For tipped employees. The overtime wages for a tipped employee is ascertained from the full minimum wage.
- For salaried employees. The overtime wages for a salaried employee is calculated on how his or her salary is set up and how many hours they worked.
Meals as Fringe Benefits.
Most restaurants offer meals to their workers, especially kitchen staff, who are always on duty. The IRS regards this as a fringe benefit. As a restaurant owner, you have the ability to exclude these meals from your worker’s wages. As long as the meals are provided to your workers on the premises, and they don’t go elsewhere to look for food, you can deduct the meals.
Most times, restaurant owners get this mixed up and this poses a problem for their business. However, it would be unreasonable to place charges on doughnuts, coffee, or any other meals taken by employees working overtime.
Too Many Forms.
Another payroll challenge restaurant owners face is the number of paperwork piling up on their desks daily. Having to sort out of the onboarding process for new employees, processing payroll, and of course, staying on the side of the law regarding tax laws.
When you consider the different wages of workers, expenses made, and the revenue flowing in, this can pose a serious payroll challenge for owners of small restaurants. It is highly recommended that you use payroll software or hire the services of professional payroll providers to handle all the complexities of tax and payroll.
Possible Discrimination on Job Applications.
As an employer, there are certain questions you’re prohibited to ask a potential employee, in order to not face lawsuits. Some of them include:
- Asking about previous arrests or convictions.
- Asking about their age.
- Religious holidays
Offering Parental Leave and Paid Sick.
One payroll challenge small restaurant owners face is the understanding of how sick and parental leaves work. An experienced payroll provider is what your business needs if you cannot handle this issue yourself.
Payroll fraud is one of the crippling challenges of small restaurants. If unchecked, your business could take a serious hit. Some employees with ill intentions may illegally log in time which they never appeared on their timesheets. Handing out this responsibility to a payroll provider will save your business in the long run.
- Jordan VanMaanen