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Restaurants & Hospitality: Setting Up Direct Deposit (2026)
Setting up or managing payroll for restaurants involves more steps than the basic payroll guides cover. Federal tip credit ($2.13/hr), state tip credit variations, tip pooling rules under FLSA 2018 amendment, minor work permits applies on top of standard federal requirements.
This guide covers the specific payroll setup and management requirements for restaurants.
Step 1: Get Your Employer Accounts Set Up
Before running payroll for restaurants, you need an Employer Identification Number (EIN) from the IRS, a state employer withholding account in each state where you have employees, and a state unemployment insurance (SUTA) account. For restaurants operating in multiple states, this means separate registrations in each state.
Step 2: Configure Pay Types for Restaurants & Hospitality
Restaurants & Hospitality have non-standard pay types that require specific configuration: tip credit and tip pooling, high turnover, multiple pay rates, split shift premiums. Each of these must be set up as a separate pay code in your payroll system with the correct tax treatment applied.
Missing this step means your system calculates overtime incorrectly, applies the wrong withholding rate, or misses required reporting -- and you do not find out until you receive a penalty notice or employee complaint.
Step 3: Set Up Compliance Tracking
Restaurants & Hospitality payroll compliance requires: Federal tip credit ($2.13/hr), state tip credit variations, tip pooling rules under FLSA 2018 amendment, minor work permits. Each of these has filing deadlines, rate requirements, or calculation rules that must be maintained current.
Set up a compliance calendar that tracks: tax deposit deadlines (semi-weekly or monthly based on your lookback period), quarterly Form 941 due dates, annual Form 940 due dates, state quarterly filings, and new hire reporting requirements.
Step 4: Run Payroll and File on Time
With accounts set up and pay types configured, run payroll on your selected frequency. For restaurants, bi-weekly or semi-monthly works for most salaried staff. tip credit and tip pooling may require different frequency or supplemental runs.
Tax deposits must be made on the IRS schedule -- either semi-weekly (if your lookback period tax liability exceeds $50,000) or monthly (if less than $50,000). Missing the deposit date triggers the IRS failure-to-deposit penalty.
The Faster Path: Managed Payroll for Restaurants & Hospitality
BEG managed payroll handles all of the above for restaurants at $25-$45 PEPM, all-inclusive. Setup takes 3-5 business days. We configure your pay types, establish your tax accounts, and run your first payroll on schedule.
Managed Payroll, Handled.
BEG manages payroll at $25-$45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
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 $25-$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 $625-$1,125 per month.
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 $25-$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: IRS: Understanding Employment Taxes
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