Tip income represents special payroll and reporting challenges for restaurant employers. Underreporting of tip income triggers a two-fold effect: inadequate withholding of the employee’s share of taxes and underpayment of the employer’s portion. Still, that’s just one side of the tip reporting coin. On the other side are requirements you must meet, such as minimum wage, tax withholding and tip allocation.
Whether you own a small business with one employee or a growing company with dozens, mistakes are bound to happen. Unfortunately when it comes to payroll, those mistakes can end up costing you a pretty penny.
Did you know that in 2014 U.S. businesses were fined roughly $5 billion in payroll tax penalties? That’s a good chunk of funds to give up for unintentional mishaps. But don’t add a payroll penalty line item to your budget yet! We have compiled a list of eight common payroll mistakes that businesses make so you can avoid them…and the penalties that follow.