How To Calculate Waitress Tips In Payroll

If you want to learn how to calculate waitress tips in payroll, you have to establish how much waitresses are making on different shifts. Usually, the night shift will make slightly higher tips than a breakfast shift.  The Internal Revenue Service considers tips taxable as income for anyone who receives them. This benefits waitresses and bartenders, for example, by providing a more accurate income level which will insure their social security taxes and FUTA tax is withheld at the proper level.

  1. Record all tips and receipts for a set period of time. Two weeks will give you a good average. If possible, break your daily receipts and tips into different shifts. Add the total tips and the total receipts. Divide the tips by the receipts to get a general percentage. For example, you have two shifts, day and night. Night receipts were $500 and the tips were $75. 75/500 = 15%. In other words, the waitresses received about 15% of total gross receipts for their shift as tips.
  2. Break down the percentage to an hourly figure, by shift, with which to calculate waitress tips in payroll. For example, you had two waitresses working during the shift. One worked 8 hours the other worked 7 hours for a total of 15 hours. Each waitress would receive approximately 1% of the gross receipts for every hour worked as a tip. You would credit the first waitress with $40 for the shift and the second waitress with $35.

You can use this figure to calculate tips for payroll reporting to the Internal Revenue Service.  Be sure to check your percentages by recording all tips and receipts at a set interval. The IRS recommends re-establishing the percentage once a year.


IRS Publication Tip Reporting

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