How Are Tips Distributed?

How tips get paid out depends on how you’ve set things up, but the concept remains the same in most restaurants.

Credit card tips usually go through your POS system and get paid to staff on their next paycheck, or sometimes the same night. Cash tips are normally kept by the person who earned them. Either way, set a clear schedule so people know when to expect their money.

This includes- Then here it splits. In certain restaurants, the bartender, busser, or food runner receives a predetermined tip from each server, which is typically a percentage of sales. Others employ a point system or a tip pool, in which all tips are totaled and divided by the number of hours worked.

A few rules matter while distributing the tips. Owners and managers can’t take any share of the tips. Tips are taxable income, so you need to include them in payroll, and employees are required to report their tips. Which jobs can be included in a pool varies by state, especially kitchen staff.

Keep good records and explain the system to every new hire before their first shift. Clear rules prevent most arguments. If you’re unsure what’s allowed, check with your state’s department of labor.