I was recently involved in a car accident. Unfortunately, since it was my first accident, I was scatter-brained and anxious. What I did not realize at the time was that the actions you take immediately after the accident can affect a personal injury case and the outcome of that case. I wanted to find a way to share my experiences and mistakes with other. Since the Internet is so popular, I figured this would be a great way to do so. While you likely aren't planning on being in an accident soon, if you are, hopefully you remember some of the tips I share on this website.
Having employees who accept tips is one way that you may lower costs. Customers are expected to tip in some industries, and tipped employees will sometimes earn more than their non-tipped counterparts who work solely for an hourly wage. However, you must avoid common mistakes that are made when using tipped employees.
Make Sure Your Employees Are Receiving Enough Tips
Understand when an employee is considered to be "tipped". An employee is not necessarily tipped if he or she has received less than $30 a month in tips. You may have a business where employees are told not to accept tips, but a customer provides a tip anyway by simply leaving money on the table.
Don't Take Your Employees' Tips Away
Any tips given to an employee belong to the employee. However, you may take a tip credit toward the minimum wage obligation for the tipped employee, which would allow you as an employer to pay less than minimum wage. Make sure to consult with an FLSA attorney service, since employers may be fined up to $1,000 for each incident of improperly withholding tips.
Don't Confuse Tips for Service Charges
Make sure that you do not confuse tips with service charges. A service charge is charged automatically, while a tip is given by the customer entirely at their discretion. Service charges act more as commissions for tax purposes, and they have an effect on overtime rates.
Understand How Tip Pools Work
One exception for collecting tips from employees is a tip pool. The tip pool is intended to help those who typically receive tips, but who may receive fewer tips than wait staff, such as a busboy. However, it's important to not provide tips to those who customarily do not receive tips, such as a chef. When these types of employees receive tips, this may be seen as an attempt to deprive wait staff of their deserved tips.
Work With the Right Professionals
Work with an accountant and possibly attorney services to make sure not only that you are following all laws regarding tipped employees, but also that you pay all of the taxes you must pay on tips received by employees. One of the challenges you might face is when employees are not reporting all of their tips. If the total tips reported is less than 8% of the sales generated, as shown on receipts, you may need to allocate the difference and pay taxes on the remaining amount.