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National Restaurant Association - Ensure tip-reporting compliance

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Ensure tip-reporting compliance

Pay close attention to tip-reporting regulations to avoid fines for non-compliance and underreporting. Now that the Internal Revenue Service has stepped up efforts to collect underreported tip income, consider these suggestions from National Restaurant Association partner Heartland Payment Systems:

1. Note important payroll deadlines. Report and deposit payroll taxes to federal, state and local agencies on time to avoid penalties and interest charges.

2. Double check data entries to avoid miscalculations. Mistakes such as incorrect hourly wages cost companies millions of dollars annually. Ensure accuracy by entering all necessary and proper payroll data.

3. Send court-ordered payments to proper recipients. Companies must follow garnishments, such as levies or child support, or face prosecution, fines or imprisonment.

4. Save payroll records. Keep time sheets, canceled checks and W-4 forms for four to six years in case of an audit.

5. Train more than one employee in payroll functions. Sickness or absenteeism aren't excuses for late payments to employees or the IRS. Institute a manual back-up system in case of computer failure.

To assist restaurant owners with this complex piece of their business, Heartland Payment Systems, one of the largest payment processors and payroll-solutions provider, recently developed and launched a new tip management service, Tip Manager.  

Tip Manager helps ensure compliance with IRS rules, reporting requirements and company tip policies. Tip Manager helps restaurant owners produce specific reports to assist with tip compliance. It also exports tip data into the general ledger system, reducing duplicate entries. Tip Manager also manages data consistency among restaurants’ point-of-sale, payroll and accounting systems.

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