Restaurant Payroll | 10 Tips to Save You 10 Hours

Josh Redford
March 22, 2022

Restaurant payroll can often be a burdensome task. It is an administrative task that most owners and operators dread because it is notoriously time-consuming. Unfortunately, you can't run a restaurant without employees, making restaurant payroll inevitable.

As complex as restaurant payroll can be, there are simple steps you can follow to help expedite the process and make payroll run a bit smoother for you at the end of each pay period.

In this article, you can learn 10 tips to save you 10 hours (or more!) on restaurant payroll. Let's get started.


What is restaurant payroll?

Restaurant payroll is the process that results in wages being distributed to employees. Each business is responsible for calculating the payroll on behalf of its employees.

The industry-specific laws involved make restaurant payroll particularly challenging, including the countless payroll deductions. Businesses must consider the different laws surrounding scheduling and tipping of employees when running payroll for their restaurants.

How do you set up restaurant payroll?

As a restaurant owner or operator, you'll be responsible for setting up your payroll. Most commonly, you'll find one of two options for running payroll.


Process Payroll Manually

Most businesses will process payroll manually, especially in the beginning. Processing your own payroll is often appealing to new business owners because it seemingly saves you money.

While processing payroll manually can save you money on paper, you'll quickly find that, due to the complex nature of restaurant payroll, it can actually cost you more over time in terms of wasted hours and costly errors.


Outsource Payroll

The other option for running restaurant payroll is to outsource it, either through payroll software or by using an accountant.

Outsourcing your restaurant payroll helps you to ensure your employees are always paid correctly and on time. Additionally, since you're relying on payroll experts, they are more likely to make sure you stay on top of all of your payroll regulations.

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What are 10 ways I can save money with restaurant payroll?

Now that you know a little more background about restaurant payroll, you can understand how complex it is. Understanding the nuances of restaurant payroll takes time and practice. Unfortunately, not all business owners and operators have time to spare.

Thankfully, we're here to help. If you're looking for different ways to save money with your payroll processing, you need to look no further. Here we give you 10 reasons your business needs HR payroll software. Keep reading to learn 10 ways to save money, specifically with restaurant payroll through the use of the software.

1 - Eliminate manual calculations.

Payroll software is a type of solution excellent for restaurant payroll because it handles all of the details of your processing. Rather than being worried about handling your own stat holiday pay, overtime, and tax calculations, this solution automatically handles it.

While some restaurant owners and operators are hesitant to pay for payroll software because of the upfront costs, many fail to realize that it will actually save you money by avoiding costly errors. Not to mention the time you'll save… On average, this solution will save you 20 hours per week! 

2 - Try overtime alerts.

Using a restaurant payroll solution that integrates with your time tracking and scheduling gives you the tools you need to set up overtime alerts when employees go, or are about to go, into overtime.

During the hustle and bustle of the restaurant's peak hours, the last thing you want to have on your mind is employee overtime. Unfortunately, these costs can add up quickly as you begin seeing when you run your payroll for that pay period.

Let overtime be out of mind and instead enlist your trust in payroll software to alert you when employees are approaching these higher-paid rates.


3 - Automated tax calculations. 

Taxes are extremely complicated for everyone, especially for restaurant owners and operators responsible for their own payroll. It is time-consuming to file, but it also requires you to be up to date on the latest laws in your area.

But you don't have to turn yourself into a fount of all tax knowledge—you can rely on payroll software instead. The software will handle automated tax calculations, including deductions and remittances! 

4 - And holiday pay calculations.

Throughout Canada, and most of the United States, you can't forget about your stat holiday pay for restaurant employees. Unfortunately, this is much easier said than done. Thankfully, payroll software will do your stat holiday pay calculations for you!  By using software that has provincial or state holiday rules embedded in the solution, calculations are done, like magic.


5 - You can schedule smarter.

Payroll processing is just one of many hats a restaurant owner or operator must wear. Another incredibly time-consuming responsibility includes scheduling. Much like payroll processing, scheduling is also tedious and susceptible to costly errors.

Machine learning data allows your payroll software to provide you with alarms when you are scheduling someone who is going to go into overtime on shifts. As a result, you can save 10 hours per week on scheduling alone!


6  - It can eliminate paid unworked time.

Eliminate buddy punches, early punch-ins and late punch-outs with restaurant payroll software that integrates with your time tracking solution. Time tracking software has saved one business owner nearly $100,000 in one year!

Like those provided by Push Time Tracking, flexible solutions allow you to manage your restaurant employees' time punches, break behaviors, and hours. Best of all, you can funnel your hours straight from Push Time Tracking into Push Payroll to streamline your payroll processing.


7 - Automate payroll processing.

An average of 5 minutes per employee per day is spent making adjustments for a typical business manually transferring clock-in/out hours from paper to their POS to their payroll system.

You can reduce the amount of time and money spent on the burden of administrative tasks and increase productivity by investing in payroll software that allows you to run payroll automation rules.

Think about it. If your restaurant has 100 employees and you're spending 5 minutes a day at $20 an hour, this could cost you $60,000 per year!


8  - Minimize payroll error costs.

When manually calculating hours to restaurant payroll, human errors are inevitable. Mistakes nearly always happen when you're manually transferring employee hours from your schedule or POS system or via pen and paper.

Unfortunately, payroll errors will negatively impact employee morale and cost your restaurant thousands of dollars for business owners. Additionally, the company is susceptible to overpaying employees for payroll errors.

If your payroll is $500,000 annually, a 2% error factor, which is industry standard, equals $10,000 in costs.


9  - Reduce time theft.

One of the biggest unintentional costs of your business is time theft, along with buddy punching. The average employee exaggerates their time worked by 43% during a standard shift.

Some of the most common examples of time theft include:


  • Arriving late and clocking in as if on time
  • Punching out late
  • Buddy punching


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If you aren't using an integrated system that allows for automated punch-in rules and then streamlines those hours to your payroll system, time theft can add up to thousands of dollars annually.‍

Fewer mistakes are made when time tracking software tracks employee hours. Data is more accurate with automating payroll and streamlining hours into payroll directly. There won't be any discrepancies between employee hours and employee pay.

Imagine this, a 100 employee establishment all punching out  5 minutes late at $20 an hour— this could cost you $60,000 annually on labor!


10  - It can get you organized.

All payroll data will be streamlined through payroll automation. For staff or management, everything payroll-related can be easily accessible online and found in one place, using an integrated and automated system. 

Nearly all payroll software providers allow employees easy online access to items like their pay stubs or T4s. But payroll software providers that are one step ahead of the rest even automate stat holiday pay calculations and help you calculate payroll taxes!

The added bonus is that, with the integration of payroll software into your restaurant, you'll be able to centralize your documents too. You'll no longer have to search for something in 10 different places and be able to store your legal and government documents securely, thanks to payroll automation software.

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How do I choose a restaurant payroll software that can do those things?

Do some research, read customer reviews, and do some internal consultation before selecting an ideal payroll provider. If you're looking for a payroll software provider, make sure they cover these basic functions:


  • Providing support and other HR services
  • Providing easy-to-comprehend payroll reports and records to employees and employers
  • Handling all payroll deductions, remittances, and taxes
  • Ensuring compliance with all provincial and federal laws regarding payroll
  • Setting up a means of payment for employees
  • Keeping a record of employees' working hours and attendance

How do I switch restaurant payroll software companies? 

If you're already locked in with a payroll software company but don't feel like they are maximizing your costs, it's time to consider switching. Don't worry, switching companies isn't something you need to be afraid of.

For assistance, you can read through our Comprehensive Guide to Switching Payroll Companies. Or, for a quick step-by-step, keep reading.


1 - Start by finding your new payroll provider.

Before starting your switch, understand what your previous service providers lack and what you want in a new one.

 

2 - Read through your present contract.

Before making the switch, you must review your current contract's terms. Keep an eye out for fees or limitations on assessing data as a part of any termination clause. Understanding this information ahead of time may influence your decision. 

Some contracts require you to give at least 30 days' notice before termination. You may be able to avoid this with cloud-based providers since you can end your subscription almost at a moment's notice. 


3 - Request ROEs for a change of provider.

A Record of Employment (ROE) is issued any time an employee quits or experiences any interruption in earning. It is also required when switching payroll providers. 

After processing your last payroll, you should ensure your current providers submit ROEs to Service Canada. This gives your new providers access to a complete pay-per-period breakdown of insurable earnings to prepare ROEs on your behalf. 

4 - Request copies of all payroll register reports.

A payroll register report provides a detailed summary of each payroll made on behalf of each employee, including:

  • Wages paid
  • DeductionRemittance


This information is required to set up old and present employees with your new provider. 

The CRA also requires you to keep records for six years from the end of the last tax year. Since getting the reports afterward may be more difficult, do this before terminating the contract. 

‍5 - Request copies of pay stubs.

You should demand copies of previous pay stubs for current and terminated employees within the current year for proper documentation and record-keeping.

 

6 - Clarify the provider to file your end of year report.

Once the transition is over, it is apparent that your new service provider should be responsible for filing your year-end report. It is still important to clarify and put this in writing. It could put you in a problematic situation if both providers submit reports on your behalf to the CRA. 

7 - Inform all stakeholders.

With these changes, your employees have to be notified of changes in how they receive their payments. This is especially important if there is any change in the frequency of payment (from bi-weekly to semi-monthly or vice versa) or payment mode (paychecks to direct deposit). 

Conclusion 

Hopefully, you can see 10 tips to save you 10 hours (or more!) on restaurant payroll and begin integrating them into your everyday business. As complex as restaurant payroll can be, it doesn't have to be with the help of payroll software services! If you are ready to start saving up to 10 hours per week, book a demo with us today.

Want to learn more about restaurant payroll and how it all works? Download our free guide below! 

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