Restaurant payroll is a lot more complicated than it used to be. Once upon a time, payroll was just payroll — paychecks and tips. But in today’s competitive labor market, many restaurants offer employee benefits like health coverage, paid time off, and performance bonuses. They also need to track HR functions like training. On top of that, many states are changing the rules on things like minimum wage and taxes on tips.
The good news is that a new generation of tech-based payroll tools can help your restaurant manage these changes. And this technology is becoming more accessible and cost-effective all the time, which means that even startups and small restaurants can take advantage.
Today, third-party providers are making it easier to handle all of your payroll, benefits, and HR functions in one place. But how can you be sure when is the right time to outsource your restaurant payroll and HR solutions?
To find out, we caught up with two experts from HR Butler, a software company specializing in advanced HR and payroll solutions. VP of Sales and Marketing Trent Dunlap and sales consultant Wes Bruning have extensive experience dealing with the complications of dealing with payroll and benefits as a restaurant operator.
Trent and Wes offered up some great tips for restaurants that are thinking about getting third-party help with payroll and HR. But before we get to the tips, we wanted to share an anecdote. We asked for a little background on HR Butler and Wes explained that the company evolved out of the need to solve a very real problem.
Originally founded in 1983, HR Butler began as a family-owned benefits broker. Wes recalls, “We were managing benefits for a large retail client, not much different from a restaurant, and they terminated an employee who was taken off of payroll but never taken off of the benefits.”
As a result, the client continued to pay the former employee’s insurance premiums for months after termination. The clerical error amounted to a six-figure loss before Trent’s team uncovered and corrected it. “We asked ourselves, ‘What's the missing piece here? How can we close that gap?’ And payroll was the answer,” says Wes. So in 1999, HR Butler purchased a small payroll company and consolidated all of its HR and payroll functions into a single software package.
The story above shows why it’s so important to be sure you’re doing everything right. Even a little mistake with your payroll and benefits can cost you a fortune. And, as Trent points out, handling restaurant payroll services and benefits together is only growing more complicated.
“When we're talking about someone doing payroll in-house,” says Wes, “there's a myriad of issues – paying taxes on time, calculating those taxes correctly especially for tipped employees, having to file with the BWC [Bureau of Workers’ Compensation] and handle the true-up [for Worker’s Compensation claims], and being able to process the W-2s accurately and in a timely manner.”
The right third-party provider can streamline these tasks and help you handle new responsibilities as they emerge.
Handing your payroll and HR tasks off to a third-party can take a big administrative burden off of your shoulders. But does that mean now is the right time to outsource your restaurant payroll and HR solutions?
The best way to answer this question is…by asking more questions! We boiled it down to five key questions that you’ll want to ask yourself before you decide whether now is the right time for a new restaurant payroll services provider.
At a time when payroll management is becoming more complicated, one of the best ways to simplify things is to close the gaps between your payroll and HR functions. Trent explains that HR Butler’s software evolved around the goal of integrating an increasingly complicated set of payroll and HR functions.
“When we started integrating restaurant payroll services, it was quite simply paying taxes, and the new revolutionary item was making direct deposits,” explains Trent. “Now we do things more associated with HR and benefits, like electronic onboarding, benefits enrollment, certification tracking, Time and Attendance integration with POS systems, Earned Wage Access (EWA), and learning management.”
If your restaurant payroll and HR solutions aren’t entirely integrated, there may be gaps in the efficiency and accuracy of both processes. Those gaps could be costing you more than you know.
A lot of restaurants use payroll services like QuickBooks or ADP, says Trent. However, these services are typically one-size-fits-all, do-it-yourself solutions. In reality, the best payroll solution for a national fast food chain is a lot different from the best payroll solution for a local pizza shop. How adaptable is your payroll platform for your needs?
Trent points out that most do-it-yourself payroll platforms do not come with customized features. By contrast, says Trent, HR Butler “services all employers — from one employee to upwards of 5,000 employees.”
“Our hope,” says Trent, “is to be able to walk into an employer’s business and resolve the unique issues that they've been facing — to integrate with their POS [point of sale], grab their data, and streamline their services so they can put the focus back into making their pizza, running their restaurant, or growing their operation.”
The payroll rules for restaurants are changing all the time. Right now, restaurants in a lot of states are trying to navigate changes to tax laws and minimum wage for tipped employees. This can cause confusion and mistakes when it comes to payroll management.
Using a third-party payroll and HR provider can help you navigate these changes and stay in compliance with fast-changing rules. Trent notes, “We're working with every employer to understand, ‘What state are you in? How are you handling this? This is really how you need to have it set up.’”
Trent explains that outsourcing restaurant payroll and HR solutions not only gives you access to technology that can handle these changes, but also access to real people who can advise you on the best way to handle the specific rules in your state.
Wes adds, “This is like an insurance policy in a sense. For example, if we make a tax filing error, that's on us. We'll pay for it for you. We're trying to take the onus off of restaurant owners.”
State rules and regulations aren’t the only things that are changing. Employee expectations are also changing in the restaurant industry. It’s more important than ever to provide meaningful compensation and benefits to restaurant employees, especially as a way to improve staff retention.
A third-party restaurant payroll and HR provider can not only help you streamline your current operation, but it can also help you plan for the future. As Trent notes, “We can launch, but we're also building out…. What does that three- to five-year plan look like?”
“Maybe we offer things like dental or vision coverage but not medical [insurance]. And maybe in year three, we're ready to add medical as a benefit,” says Trent. “We will walk through everything you hope to offer so we can baby step into additional benefits and HR features when you’re ready.”
One of the strongest arguments in favor of outsourcing your restaurant payroll and HR solutions is the support that comes with it. Trent notes, “Most restaurants start out fighting to survive, so they are handling their payroll internally while using something bare bones like QuickBooks.”
But as your business grows, this approach can become increasingly difficult to maintain. Trent says, “The employer has just built themselves up without realizing that this has gotten more and more convoluted. This do-it-yourself strategy has become outdated based on where they are, especially if they're at the point where they have multiple locations.”
Independent restaurant owners may also not realize that they now have access to increasingly sophisticated tools, the kind that were once only available to big national chains. Trent says, “It’s now possible for smaller employers to afford that type of software along with a very high level of customer service.”
“We know that, just like people, no two companies are the same. We've all got our individual fingerprints,” says Trent. “So what we really want to do is accommodate what each individual employer is doing and provide personalized recommendations on how to make their life better.”
We share this mission at Back of House. We know that every restaurant has its own technology needs, whether you're looking for payroll and HR services, hiring and recruitment software, or scheduling platforms.
For personalized guidance, reach out and schedule your free one-on-one consultation with an in-house restaurant tech expert today!