As a restaurant owner you are likely calculating your cost-per-plate to the penny. It's important to know your profit margins in an industry that relies heavily on volume sales to survive. And if you're a decent size restaurant with a staff to cater to your patrons, you're also likely calculating your labor through payroll.
It's all in the pudding
There are many ways to reduce the cost of running your business. However, many restaurant owners don't take advantage of the payroll FICA tax credit. There are hundreds of dollars to be saved on each employee every year IF tips are reported correctly to the IRS.
The credit , formally known as the "Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips" is as complicated to calculate as the former title sounds. According to the Federal Insurance Contributions Act (FICA) tips are defined as income, and both employees and employers are required by law to pay taxes on these tips (approx 8% on the dollar).
To help mitigate this cost, the FICA tip credit was created. Businesses that employ staff who earn tips are able to recover most of their money, offset by credit on their tax return. The IRS Form 8846 has many stipulations and other factors that may be best handled through a CPA or full-service payroll company.
Don't let the money you're entitled to slip away. The Merchant Intelligence Group can help you find a payroll solution.
Posted on 04/18/2017 at 05:52 AM
