Advising restaurant clients on their unique challenges

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All business owners face a variety of barriers when starting and running their companies, but restaurant owners must manage a unique set of payroll and HR circumstances that accountants, as trusted business advisors, can help them understand and comply with.

The many regulations impacting the restaurant industry can be overwhelming and costly if owners do not adhere to them. Lack of compliance can result in fines and penalties, disorganized operations, dissatisfied employees, and ultimately, dissatisfied customers.

More than most industries, food service managers and owners must manage a complex payroll based on the various methods their employees are paid. For each of those methods there are ever-changing rules and regulations restaurateurs must follow. While the federal minimum wage has not changed for nearly a decade, many states and municipalities have adopted higher minimum wage rates. Employers covered by multiple minimum wage requirements must follow the stricter standard, the one that is most beneficial to the employee, whether they are hourly or salaried, tipped or non-tipped. There are also overtime rules that apply to many employees when they work more than 40 hours per week.

Clients may want to use a cashless tip management technology solution that allows restaurant owners to track employees’ tips, calculate tip sharing and pooling amounts, and disburse tips at the end of an employee’s shift, improving safety and accuracy of payment. Food service managers who accurately follow tip reporting codes can benefit from the FICA Tip Tax Credit. To qualify, managers must complete IRS Form 8846 to receive the credit and IRS Form 8027 to report tips if the restaurant employs more than 10 tipped employees. To help manage payroll compliance, accounting clients can benefit from a time and attendance system that helps them keep track of overtime hours, shift changes, time off and more.

In addition to unique payment considerations, the restaurant industry also experiences a high rate of turnover. In general, food service jobs are low-paid, entail shift work, and offer few benefits. Couple those factors with the tightening labor market and it is difficult for restaurant owners to find qualified, loyal employees. Though some turnover is unavoidable as young people take food service jobs before starting a full-time career, there are ways to retain high-quality employees at restaurants, including effective onboarding, training, and ancillary benefits (such as tuition reimbursement and gym memberships). HR technology can also help restaurant owners struggling to recruit and retain employees. A fully integrated human capital management solution can take employees from recruiting and applicant tracking to onboarding and HR form completion to time and attendance tracking and performance management.

As with payroll, efficient employee management can pay off. For example, the Work Opportunity Tax Credit gives businesses incentives to hire and keep workers from certain groups, such as military veterans, food stamp recipients, and others with significant barriers to employment. Employers that hire WOTC-eligible individuals generally receive a tax credit equal to 25 percent or 40 percent of a new worker's first-year wages, up to the maximum for the group to which they belong. Qualified restaurants earn 25 percent for hires who work at least 120 hours during the first year of employment, and 40 percent if they work at least 400 hours in that first year.

Given the proper tools, resources, and guidance, restaurant owners can more easily manage the payroll and HR aspects of their business. Most small-business owners are not experts in business operations, regulations and compliance. A restaurant owner is likely focused on great food and diner experience, rather than researching available tax credits. That’s where accountants come in. Your restaurateur clients rely on your advice regarding the payroll and HR processes and solutions that work for them and allow them to focus on growing their business.

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Payroll HR Technology Tax regulations WOTC Tax credits Small business Paychex