How to calculate payroll for tipped employees

To calculate payroll for tipped employees, you first need to gather the required information. By law, employees must provide you with the dollar amount of tips earned by the 10th of each month. You must take out withholding taxes if they earn more than $20. From there, you can use that information to calculate payroll.

Various online payroll tax calculators can help tipped employees fill in the correct information to determine what to withhold and how to complete payroll. You can also purchase restaurant payroll software that makes it easier to automate the process, including submitting all of the necessary tax filings.