New Year, New Employee Management Software: An Easy Time to Switch Restaurant Payroll Software

Last updated on October 27, 2022.

The end of the year is sneaking up fast. That means it’s almost time for family gatherings, holiday promotions, and putting your new year’s restaurant plans into action.

As a restaurant owner, you’re likely focused on improving your operations in the new year. You may even be setting some New Year’s resolutions for yourself — like getting some me time back in your life or spending more time with your loved ones. But there’s one key component for your new year planning you may be overlooking: employee management and payroll services.

Let’s discuss the basics of restaurant payroll and what you should keep in mind when planning to switch providers.

What does a restaurant payroll system do?

Payroll software is what allows a restaurant to pay their employees. Sometimes, payroll software also includes HR solutions, such as employee benefit management, hour tracking, and new employee onboarding. Overall, payroll is the process of calculating and distributing wages to restaurant employees and a payroll system, at a bare minimum, should provide the ability to do so.

One thing restaurant owners need to keep in mind when it comes to payroll is that there may be industry-specific laws around scheduling and tipped employees that must be adhered to.

The FLSA, also known as the Fair Labor Standards Act, sets regulations about minimum wage, overtime, recordkeeping, and child labor standards. However, restaurant owners must also keep in mind that there are additional laws depending on the state and/or locality in which they operate. And, if you operate a restaurant chain that has locations in multiple states or cities, you should be especially mindful that the laws may vary from location to location. 

Restaurant owners can help ensure employees get paid accurately and on time by running payroll with restaurant payroll software.

What payroll systems do restaurants use?

There are many restaurant payroll software options to choose from. Here are some common payroll processing companies used by restaurants:

• ADP
• Gusto
• Xero
• Paychex
• SurePayroll
• Toast Payroll & Team Management

While companies like ADP and Paychex are well-known for their human resource, payroll, and benefits management tools, one thing that sets Toast Payroll & Team Management apart is that Toast is built specifically for restaurants. When choosing a payroll system for your restaurant, it’s important to go with a company that understands your business inside and out.

What features should I look for in a payroll system?

Depending on the complexity of your business, what you may want from a payroll system may differ. However, there are some basics that all restaurants should look for, whether you’re a small business or a large chain.

Direct deposit

While some employees may still prefer a paper check, most workers these days are happy with direct deposit. Direct deposit is when a paycheck is electronically deposited into someone’s bank account.

Time tracking

Being able to track your staff’s time will help streamline scheduling, payments, and more. Bonus points if the software alerts you to employees who may be reaching overtime hours!

Point of sale (POS system) integration

Having payroll software that directly integrates with your POS platform will help make the employee management process more intuitive. This also allows for easy onboarding of new hires and self-service of clock-ins.

Pay cards

A payroll card, also known as a pay card, is a prepaid debit card provided by an employer for the purpose of distributing pay. Pay cards can help streamline the payroll process for employers by replacing cash tip-outs and paper checks. For employees, pay cards are helpful for those who don’t have a bank account to receive their wages or may need money faster than a paper check can provide. Some pay card programs, such as Toast Pay Card and PayOut, even provide instant access to a portion of earned tips and wages after every shift!1,2

Customer support

Like with any technology, it’s a smart decision to choose a payroll provider who offers customer support. This way, if you should come across an issue and need assistance, someone will be able to jump in and help remedy the problem.

Why should I switch my restaurant payroll for the new year?

Starting fresh in a new tax year means one set of employee W2s for the year and no need to import tax data from your prior provider. Human error & one-off employee requests become a thing of the past when hours, tips, and scheduling are integrated right into your payroll platform. So, start your year off on the right foot with a payroll solution built for your restaurant.

What do I need when switching payroll software?

Switching payroll providers can be nerve-wracking, but a little preparation makes for an easy process. Plus, by switching at the new year you’ll have an even easier process with less historical data to keep track of.

Below are a few key items to have on hand when preparing to switch your restaurant payroll provider. Keep in mind that this list is not exhaustive and your provider may require additional information.

FEIN and State Tax ID Numbers

An FEIN, or Federal Employer Identification Number, is a number assigned by the IRS to distinguish each business as a unique entity. This number, along with your State Tax Identification Number, allows your payroll provider to easily identify your business for tax purposes. 

Payroll banking information

The banking information determines which account you want payroll to be pulled from. Some businesses prefer to set up a separate bank account for managing payroll to ensure adequate funds are in the account each pay period (e.g., weekly, bi-weekly, monthly, or some other interval).

Pay frequency and first check date

The pay frequency defines how often you will pay employees. Understanding the first check date helps determine the necessary steps to meet this pay frequency with a smooth handoff from your current payroll provider without a lapse in pay.

Fresh team management tools can reduce your costs and save you time in 2023

Interested in learning more about Toast Payroll & Team Management? Schedule your free demo today. We’ll set your restaurant up for success and partner with you to simply file your payroll taxes3.

“Having Toast all in one system — it’s almost like having three additional employees. [It gives] me time to focus on creating great recipes and sourcing good beer.” — Justin LeGore & Alex Benbassat, Cofounders of Barkhaus.

Toast Pay Cards are issued by Sutton Bank, Member FDIC, pursuant to license by Mastercard. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard®. Toast PayOuts are funded by a 0% line of credit issued to employers by Toast, Inc. Toast reserves the right to change or discontinue this program at any time. Toast Pay Card and PayOut is not available in all jurisdictions and is available to Toast Payroll customers only.

1 Access is typically available instantly after the employee's shift; however, if restaurants tip pool using Toast Tips Manager, Toast PayOuts of tips are available after the tip pool is approved and sent to Toast Payroll, typically the next calendar day.

2 Toast PayOuts are limited to a portion of wages and tips to help account for estimated taxes, withholdings, and deductions. Tip PayOuts are not available at restaurants that tip pool without using Toast Tips Manager. Employees must receive wages via the Toast Pay Card in order to access Toast PayOuts. Tips will be paid to employees on the Toast Pay Card as though they were receiving them in cash. Wages will be advanced by employers during the pay period and deducted from their total wages paid to them on payday. 

3 We file most payroll taxes on your behalf. See this list of exceptions.