Running a restaurant is no easy job. Especially post-pandemic, when many restaurant owners are struggling to manage their finances, staffing and more, it can demand long days, so finding ways to simplify the many aspects of running such a business makes sense.
Payroll can be one big headache that could take time and effort, so If you can choose software and services that make it happen and that meets all your needs in one easy package or outsourced service, you would be wise to consider this.
Outsourcing payroll services can make sense for both large and small businesses freeing up vital time to manage other aspects of the company, ensuring all your staff are paid the correct wages when they should be. It can be challenging to correctly pay any number of staff potentially working different shifts and hours each week and having many pay grades to contend with.
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Unique payroll challenges for restaurants
Staff turnover can be high, especially amongst waiting and table service staff, so the administration can be higher than in non-hospitality businesses. There are likely to be many different tax codes and deductions to manage alongside national insurance contributions and HMRC reporting that has to be carried out on each payroll run and for each employee.
There is also the matter of tips; how they are handled and determining what should and shouldn’t be included as part of the taxable wage. You may also face many fringe benefit decisions and having to decide whether any staff provided food is allowable in salary and tax calculations. Overtime can also quickly become a headache. Working out various rates and ensuring that every employee receives the correct amount due is essential if you want a happy workforce. No one likes being paid the wrong amount and it can quickly lead to discord if done incorrectly.
Best practices for restaurant payroll
Best practices for running a restaurant will differ significantly from those required to get payroll running smoothly. It is no good having the best steak in town or the best sushi if you struggle to create the right ambience because you have disgruntled chefs and waiting staff because the third month in a row, their pay has not been appropriately calculated! It is a different skill that requires different abilities, so what can you do to make life easier for yourself or your payroll provider?
- Collect and maintain accurate employee information. Make sure it is clear on rates of pay and the number of hours expected. Overtime rates, meal allowances, start date and locations. Also, be clear on an individuals’ tax code and record other compulsory deductions scheduled to be made from salaries. Having clear information on marital status and contact details and keeping up with pay to date, total tax and national insurance paid is a must.
- Have a clear system for recording holidays, time spent on jobs at different pay grades, promotions, and terminations. Having forms that can be easily provided to payroll services or staff is a must.
- If your employees work in multiple locations, you may need additional recording to track hours worked at the various sites. You must be able to correctly allocate ‘benefits’ received during periods away from their base restaurant or identify when allowable travel expenses can be claimed to require a salary adjustment.
- Having a straightforward means to record and update required payment methods ensures no one is missed or paid incorrectly.
Best payroll software for restaurants
|Name of provider||Good to know…|
|Gusto||With an average user satisfaction score of 99% and 8.2/10 on Trustradius, it is claimed running Gusto is easy. It ranks highly for automated restaurant payroll, whether for large or small business employee numbers, to avoid you needing to dedicate hours of valuable time thinking and overcoming common payroll issues.|
|Dataplan Payroll||Ranks highly, with Facebook reviews running at the top 5 levels. They specialise in providing payroll for the hospitality sector. With experience in flexible and scalable restaurant solutions, they cater to zero-hour contracts, casual and bank staff, high staff turnover, and multi-site operations.|
|Intuit Quickbooks Payroll||Available as an add-on to your chosen Intuit QuickBooks package, QuickBooks rates highly on Trust Pilot, receiving 4.5/5 on over 7000 reviews. Over 4.5 million businesses use QuickBooks worldwide for many different industries. The ability to add in payroll services takes their services further to becoming an all-around solution for restaurants.|
|Square Payroll||Provided by the POS company Square, they have achieved 4.7/5 on Trustpilot with particular mention for exceptional customer service. It offers access to a highly reviewed mobile app and it includes a tax-filing guarantee that many others do not.|
Best payroll services for restaurants
Outsourcing or in-house?
This could pivot entirely on the number of staff you have, the time you have and whether you have the expertise or wish to employ such expertise to get it right. If you are already running an entire accounts department, dedicating a staff member or two to payroll for a large organisation may be pretty straightforward.
However, smaller businesses or those with complex organisations may find that the services of an outsourcing payroll partner are invaluable. It may be cheaper to hire someone internally to manage payroll, but using software capable of meeting the different demands hospitality and restaurant businesses can add up. You may still face disgruntled employees if things go wrong and require far more significant investment in software to manage all that is needed.
Outsourcing payroll can bring many benefits in that you instantly have the expertise at hand. There will be templates and structures designed to reduce the errors and traps you could fall into if you manage in-house. Outsourced services will typically use processes that closely adhere to best business practices and compliance reporting requirements.
Integrating many additional HR functions into outsourced payroll solutions is also simple, allowing for benefits/statutory deductions and in/out recruitment management. P45 leaving and P60 benefit-in-kind paperwork can be a headache overcome by outsourcing payroll solutions too.
Lastly, we again say accuracy: accuracy is essential to ensure payroll runs on time and gives all employees the wages they are due without hiccoughs. Making the correct deductions or delaying payments to correct inaccuracies could, after all, cause hardship to many of your employees.
It will undoubtedly damage employee relations and could quickly become a staff turnover nightmare and stop you from attracting the best talent if word gets around that you have difficulty paying them. Outsourcing and automating as many processes to deliver salaries and payments on time will leave you free to concentrate on other business areas that you enjoy.
Another benefit is should something go wrong, you have experts on hand to make a skilful and speedy resolution without tarnishing your reputation.
That seems quite a few positives for outsourcing, so are there any negatives? Suppose you are a larger company with an extensive workforce. In that case, it can become pretty costly, as most charge on a per-employee or pay frequency basis, which means having one or two payroll specialists in-house is more acceptable. However, the cost and time savings can certainly be a worthwhile investment for small to medium businesses to keep things running smoothly.
How much does restaurant payroll cost?
|Provider||Service||Average cost||Factors affecting cost|
|Gusto||A relative newcomer to the payroll service, they offer a highly rated payroll service for small businesses. It is priced in us dollars and has a lower upfront fee to QuickBooks Payroll but a higher employee charge per month.||Ranging from £39-£149 a month base charge and employee fees of £6 -£12 a month, you can tailor your needs from core to concierge.||There is no additional charge for unlimited payroll runs or off-cycle payrolls. They offer a contractor’s plan where you only pay for each contractor without a monthly fee.|
|Dataplan payroll||Managed Payroll/BACS accredited payroll handling with no need for additional data entry||Individual quotes are available to create a tailored package.||Very little isn’t included. Pricing is based on specific requirements, so you don’t pay for what you don’t need. They can handle P45/P60 issues.|
|Intuit QuickBooks Payroll||QuickBooks basic to advanced plus Payroll allows for all accounting services in one place.||Standard QuickBooks costs of £12 to £30 per month plus the Payroll option at a standard rate of £4 per month plus £1 per employee or Advanced at £8 per month plus £1 per employee (all amounts plus VAT).||Additional advanced features offer multi-frequency payments, timesheets and automatic pension submissions to pension providers|
|Square Payroll||For those using Square POS, this is a cost-effective payroll solution for bars and restaurants||Starting at around £35 per month and 5% per person, you get to track and import tips and commissions as well as tax filing and payments. They also offer free seasonal inactivity, which is great for restaurants that may have closed seasons.||They also off a contractor option of £5 a month per contractor paid, with no monthly fee.|
Mistakes to avoid when doing payroll for restaurants
Use a clocking in and out system to monitor hours worked and break times. Manually filling out timesheets leads to inadvertent errors and omissions that translate to payroll errors. Use unique clock ins to avoid timesheet falsification or clocking in for someone else.
Use tools to assist with recognising tips and overtime earned to avoid tax issues at payroll time. The more automated you can make your processing, such as individual till logins and income allocation, the easier you will manage your payroll processes.
If you want to manage payroll in house, which package you choose will ultimately depend on the services you need. Some charge extra to create payslips. Some require you to transfer data and make payments yourself, so prices will depend on how inclusive you want your service to be. Each is different, so it can take some time to find the one best suited to your needs.
Alternatively, whilst it may seem like a costlier option initially, you could find outsourcing your payroll saves you money ultimately. Fewer costly mistakes, fewer errors mean fewer disgruntled employees. Reliable, accurate and timely reporting to meet legal requirements and a lot less hassle taking on the responsibility every week or month to ensure everything has been covered could be a valuable investment.
With so much to consider, we certainly wouldn’t wish to push you in the direction of anyone in particular. Instead, we would recommend you look for ones that have experience in your type of restaurant, so they are on board with the challenges you face. Read reviews left by others and pick up on those with an excellent reputation to enquire further about how they can meet your needs. With many offering both basic and premium packages, it is essential to consider which meets your needs now and which you may need to access as your business grows. Understanding the add-ons and likely costs from the array of pricing available to get what you need both now and as you develop should help you choose one to partner with.
Again, much the same ways as services offered, payroll software can do as much or as little as you need it to. So understanding your needs will help you to choose from the many packages available. Having one that can cope with all you need to manage payroll for restaurants and hospitality effectively may require you to choose differently from many other industry types. It must allow for tips and be able to cope with potentially high staff turnover and link with your systems to record attendances or have the ability for you to maintain adequate records to complete payroll runs without hitches.
Packages are currently offered from £29 upwards to as much as £149 per month flat fees with a cost per employee of $6-12 dollars, not unusual in addition.
You need to have proper records set up initially and collect all of the relevant data and paperwork from your employees, such as the new employer part of a P45, to ensure you have their current tax code details. You should then choose your payroll schedule and ensure you understand the rules and how to calculate both income tax and national insurance deductions. You will also need to fill out your business tax forms and report payments made to employees to HMRC, understanding the relevance of dates to ensure the correct information is recorded. Your payment dates and amounts will have a knock on effect for anyone claiming any supporting benefits such as Universal Credit, so you will want to be sure you don’t cause them hardships by incorrect reporting.
We don’t want to put you off, but getting payroll right is one way to keep happy staff. After all, no one wants to work and feel they are not appreciated enough not to be paid the right amount at the right time. So, if this worries you or is beyond your expertise, outsourcing could be the answer.