Tips

Auto-gratuities and the 80/20 Rule

Webster’s dictionary defines a gratuity (aka a tip) as something given voluntarily in return for a favor or service. The key word is “voluntarily”. If we accept that definition it is easy to see that the term automatic gratuity (auto-gratuity) is an oxymoron. You cannot automatically add on a gratuity if it needs to be voluntary. The IRS agrees. If …

What is the Future of Tipping?

A hot topic of discussion recently has been about increasing the minimum wage and specifically increasing the sub-minimum wage paid to tipped employees (minimum wage minus the tip credit). As minimum wage increases and the tip credit decreases or even disappears, more restaurateurs will consider eliminating tipping altogether in their establishments. Most of the debate will revolve around cultural habits. …

The Top 5 things to know about Form 8027 and Tip Reporting

2014 came and went, and all that’s left is the accounting! As you prepare for your 2014 filings, don’t overlook tip reporting. The IRS requires most restaurants to file an annual tip income report using Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips. Here are 5 important things you need to know: 1. Forms are due …

Tip Reporting

There are many unique things about restaurants which make them different from other businesses. When it comes to payroll, it’s the fact that many employees receive much of their compensation from customers in the form of gratuities. This is quite a unique phenomenon. For one thing, the employer has no control over these tips and therefore no control over the …