This post covers general information and does not constitute legal or tax advice — for advice specific to your business, be sure to consult with a professional.
Running payroll for a restaurant can seem intimidating. All the taxes, timecard corrections, tip splitting, and IRS forms are a lot to handle.
And while using a payroll processor certainly makes things easier, there can still be many steps to remember and lots of information to gather when you’re running payroll. That’s why we put together this handy checklist so you don’t miss a thing.
Setting Up Your Payroll Processor
When running payroll for the first time, you’re going to need at least the following at your disposal:
- Your Employer Identification Number (EIN): This is the number the IRS will use to identify you when you pay payroll taxes.
- Your state tax ID (SEIN): This is the number your state will use to identify you when you pay payroll taxes.
- A list of your employees and their pertinent information: If you’re paying these employees for the first time, you will need:
- W-4s so you can calculate tax withholdings correctly
- Full legal name
- Social Security Number
If you’ve paid them before, you’ll need each employee’s year-to-date payroll information in addition.
- Your bank account and routing number: These numbers will correspond to the account you want to pay your team from.
- Your pay period: You’ll want to determine how often you’re going to pay employees before you set up to run payroll with your processor.
Now you’re ready to run payroll. This is the easy part! You'll need information for two things:
1. Timecards or hours worked: You’ll need to know the hours your employees worked so you can properly calculate their pay. If you track time using 7shifts and you’re using Square Payroll to process payroll, you can import the timecards automatically. If you track time manually, then you’ll have to enter your employees’ hours manually as well.
Tip: The U.S. Department of Labor requires you to keep track of wages records (including timecards) for up to two years. So make sure your records are safe and organized.
2. Tip Information: If your employees receive tips, whether they’re credit card or cash tips, you’ll need to report them to your state tax agency and the IRS. Payroll processors make this very easy. Just add in the tip information when you’re getting ready to run payroll. This way the right amount of taxes can be withheld and credit card tips can be paid out in paychecks.
Tip: If you use Square as your POS, you can import the tips into Square Payroll with the click of a button.
Now you're ready to pay your team. Confirm all the information before you run to make sure you’re paying the right amount.
That's it! It may have felt daunting at first, but running payroll with a payroll processor really is quite easy. Keep this checklist on hand and running payroll will be one of the easier tasks on your to-do list.
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Sydney does Content Marketing Strategy for Square. She writes about hiring, tax compliance, management, and payroll.