The Simpay Academy​

Your Complete Guide to Setting Up Restaurant Payroll

Whether you’ve just started out, or have been up and running for a while now, getting your restaurant payroll operations set up correctly is vitally important.  Streamlining the process reduces a considerable amount of overhead and time . Allow it to get out of hand, and your bottom line will suffer.

Thankfully, there are techniques to keep your costs under control so your business is always profitable.


Restaurant payroll is an overarching phrase that relates to a variety of components of your business. Including who you employ, calculating wages and taxes, and completing salary payments in a timely fashion. 

Getting Started

The Paperwork

Getting your federal, state, and local paperwork in order is one of the first stages in establishing a successful payroll for your restaurant. 


This includes obtaining your employee identification number (EIN), state tax identification numbers, and completing your forms of employment (e.g., W-4 and I-9).


Setting up a timetable for when you will pay your staff, one that is adaptable and scalable is crucial, this is also known as a payroll schedule. It is vital to track payments and ensure payroll is met on time.w

It’s a best practice to have your earnings and taxes paid into a separate bank account. So whether you opt to perform your own payroll or use a payroll service, you must have all of this information on file before you cut your first check.


Unique Employee Pay Rates 

Restaurant payroll is distinct in that employees frequently perform many responsibilities throughout a pay cycle. And, in most cases, your business will pay each of those positions a unique rate. 


A host or hostess may earn $20  per hour, and a server $15. If you have a no-show issue, a server can fill in for your host or a busser can fill in for a server for single or multiple shifts.  


Overtime pay is another variable that has its own formulae you must be aware of in order to calculate the correct pay rates. You must pay the employee time and a half (1.5 times their normal hourly wage) for any hours performed in excess of forty hours. This can become tricky when tipped earnings and other compensation systems are factored in. 


It is important to understand how to calculate overtime, set up numerous pay rates, and take account of who worked what position for how long . Reliable and intuitive payroll software can go a long way in helping you track all these metrics. 

Up & Running

Shift Hours & Timesheets

Once you’ve established your restaurant payroll procedure, it’s time to start examining the figures. The first step is to gather timesheets efficiently so you can determine how many hours each of your employees have worked. Your timesheets might be on paper, on a punch card, or in digital format. Digital timesheets are the simplest to utilize because you input the figures immediately into the software to conduct the calculations and generate the final compensation.

Calculating Gross Wage, Tax, and Net Pay

Gross pay is the total amount of compensation before taxes or deductions.

It is vital that your payroll process is accurate in order to obtain the correct gross amounts per individual. Pre-tax deductions are next. These are deductions your employees decide to remove from their paychecks . These include such things as health benefits, retirement contributions, and life insurance. 

Taxes account for a sizable portion of any company’s payroll. Calculating them incorrectly, or omitting them entirely leads to serious legal difficulties and expensive fines in the future. Consult with a labor attorney or accountant to ensure you are in full compliance with all local, state, and federal tax regulations at all times.  An online payroll system can support you in automatically generating accurate tax deductions too.

After you’ve deducted all the obligatory expenditures from the initial gross pay, the remaining balance, referred to as net pay, is the employee’s  take home wage.

Cut The Check

This is the final stage in your restaurant payroll. The only thing left to do is cut checks and distribute them to your staff. 

This may include directing your employees to a specified location to pick up a physical check, having someone walk around and hand out checks, or depositing the net pay straight into their bank accounts via a payroll system or online bank account.

Online Payroll Solutions

Now that you have a working knowledge of how to set up payroll for your business, you may be wondering, ‘how do I automate these processes and reduce the labor?’

Simpay incorporates every stage of your business payroll into one easy-to-use payroll software. From the get-go, you have access to all the tools you need to calculate gross hourly wages (including tips), manage deductions, and stay on top of taxes.

From fine dining establishments to pubs, diners, pop-up stores and more, our payroll solutions give you the peace of mind to focus on delivering a great experience for your patrons.

Get in touch with us today to discuss how Simpay can keep your business moving. Contact us today at info@simpay.net or at 866-253-2227. 

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