During my college days, I worked as a waiter in a family restaurant. It was an eclectic place that could only be owned by an independent operator and served every kind of food you could imagine. I’m not exaggerating when I say this. I’m talking Mexican, Italian, pizza, burgers, fried chicken, and other American menu staples. The restaurant even made their own salsa in house, which I have to admit was pretty good. Did I mention they had a buffet line for lunch and dinner as well?
In spite of the large menu and what must have been an incredible amount of food waste, the restaurant had been open more than 20 years when I was working there and remains in business to this day under different ownership.
After each shift, I would write my tips into the reporting form posted at the entry way of the kitchen. This tip reporting form is a requirement for restaurants with wait staff so they can report a more accurate estimate of waitstaff income to the government.
Employee’s Report of Tips to Employers on IRS.gov.
To put plainly, the reporting form allows the government to tax tips. As you can learn on the IRS website, additional payments made with cash or credit should be included on this form. If you happen to get a non-cash gift like concern tickets those should also be included in this document and taxed. As an employee, it’s your responsibility to report the total of these tips during tax season. Thanks Uncle Sam!
The components of a tip reporting form
You can download this exact tip log below.
Most daily tip reporting forms are simple to make. Many restaurants print out a copy of these monthly and tape them up on a wall where waitstaff signs in and out of work each day. These are the columns and field usually included in these documents:
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- Name: Enter the first name and last name of the waiter or waitress.
- Date: This is the date you worked and made tipped income. Some tip logs will include columns with Sunday – Saturday.
- Daily Tip Amount: This is the tip amount being recorded to the employer. These tip amounts are made mostly on the honor system in restaurants. Servers will need to report all daily tips unless that amount is under $20.
- Total Weekly Tips: This is the sum of all tips reported by an employee per week or month.
- Employee ID Number: This is not a requirement, especially for small restaurants with less staff. But including employee ID number can make documentation easier for management.
- Charged Tip %: Another optional field allows you to understand the percentage of tips based on the amount of the guest ticket. This can give you a reference of the wait staff that’s producing the highest % of tips and offer clues into who’s offering the best customer service. Implementing this can add an extra layer of complexity for waitstaff and managers unless you have the right software in place to manage this. This isn’t recommended in most situations. Total guest tickets / Total Tips = Charged tip %.
Update this tip reporting log monthly to keep everything as simple as possible for employees. We suggest keeping a template ready to print off that can be easily updated to reflect the correct month and year. You could also publish this template on a Google Doc online to save a tree, but be aware of privacy concerns.
Tip declaration templates you can use
Tip Reporting Template in Google Docs: You can copy and paste this into your own free Google Docs account or other spreadsheet program to use in your business.
Printable tip declaration template: Download this PDF now and use in your restaurant. You can edit the name and tip amount fields right in this document. This document will automatically add up the tips you enter into the document for easier use. Alternatively, you can always print this off and use old fashioned pen and paper to document.
Ways to encourage wait staff to report more tips
Ways you can encourage waiters to report more tips.
Let’s be honest. It can be a challenge to get wait staff to report their full tip amount at the end of every shift. Employees are not incentivized to report tips because the more that’s reported the less money is kept at the end of the year. But there are some creative ways you can encourage wait staff to claim more every week.
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- Offer incentives: One way the restaurant I used to work at encouraged tip reporting was to give waiters and waitresses with the highest reported tip amounts free gift cards each month. They weren’t big amounts. Maybe $20 for the top tip reported and $10 for the individual coming in 2nd. It may not seem like a lot, but for a college kid the prospect of getting a couple free meals each month was a good deal.
- Recognize employees: Sometimes a little employee recognition is all you need to encourage a desired behavior. You could create a plague recognizing the top tip getter of the month. Another option is to verbally commend the highest tip reporters of the week at team meetings.
- Fear: Another option is gently reminding workers they are required by law to report all tips. If they fail to report, there could be consequences from the IRS.
Reporting tips is probably one of the most difficult behaviors to gain traction on from employees. But if you offer a few incentives and regularly stress the importance of reporting the rate of reporting can get better.
If you’re operating a restaurant, don’t forget to download our free menu and recipe cost calculator. This tool lets you determine the cost of every menu item and is an essential document for operating a profitable restaurant.
