New York Restaurant Payroll – All the Things You Need to Consider

March 24, 2022 / Category: New York Payroll Management , Payroll Management

In New York, the restaurant industry is an integral part of the City’s economic and social fabric. That includes four-star world-famous establishments, small, family-owned restaurants, and food carts. It is also worth mentioning that New York has multiple restaurants offering cuisines from every part of the world. Additionally, recent statistics indicate that in 2019, New York’s restaurant industry had 23,650 establishments that employed 317,800 individuals. The same year, restaurants in the city made nearly $27 billion in taxable sales and the total wages they paid amounted to $10.7 billion. On the other hand, understand that calculating New York restaurant payroll can be challenging, yet it is necessary.

The reason is that paying your restaurant workers goes beyond giving them their monthly salary. Payroll procedures involve a lot and can be stressful and time-consuming.

Also, note that paying your employees correctly allows you to avoid legal issues as well as unnecessary fees and fines. That, in turn, boosts the morale of those working at your restaurant. For that reason, you should consider outsourcing the service to Premier Payroll Solutions.

By doing so, managing your New York restaurant payroll will become a lot easier. You will also find time to focus on growing your establishment. As you consider outsourcing the service, here are some of the things you need to know about New York restaurant payroll.

Woman in her restaurant business using a tablet computer to review laws and regulations regarding New York restaurant payroll.

What You to Take Note About New York Restaurant Payroll


1. Maintaining Proper Records is Critical

Some of the records your restaurant generates will include details about every pay period, employee data, the number of tips your worker’s report, among other things. Such records should be kept safe and orderly, and that is achievable using payroll software.

You also need to maintain records of how you determined your restaurant wages for the past two years or so. That includes time cards that align with the Fair Labor Standards Act (FLSA) timekeeping regulations and payroll software facilitates this process through automatic recording.


2. Payroll Percentages for Your Restaurant Should be Right

Below are some of the questions you need to answer when establishing your payroll:

  • The percentage of the average kitchen labor cost
  • What percentage of sales should make up your restaurant’s payroll?
  • What should the food cost percentage be?

Indeed, there will always be exceptions since every restaurant is unique. As much as that is the case, insight into the typical percentages sheds light on where to start when evaluating the financial performance of your restaurant. 

The first thing worth considering, in this case, is the prime expenditure. This refers to the total cost of labor, food, and beverages. It should be about 55%-65% of your restaurant’s sales. The remaining amount should take care of other expenses like utilities, rent, advertising, and other overhead costs. Your profit will be what remains after getting these expenses out of the way.

Understand that your labor expenses should be around 25%-40% depending on the type of restaurant you operate. For instance, particular foods take more labor to prepare, and high-end restaurants provide more attentive service. As such, the labor cost in both cases will be higher. The location of your restaurant within New York is the other factor that will dictate the minimum wage you should offer.


3. Adhering to Your Payroll Deadlines is Paramount

If you do not want to incur penalties and interest charges for violating the IRS tax law, you need to be conversant with the deadlines for depositing payroll taxes and income taxes. Also, paying your restaurant workers promptly improves their morale, makes them happy and acts as a sign that you mind their welfare.

For that reason, automating your payroll processing ensures that your restaurant does not miss a payroll deadline, and Premier Payroll Solutions can help with that. 

Two male restaurant owners using computer software to ensure their business records are kept safely - adhering to New York restaurant payroll practices.

4. Your Employees Should be Classified Appropriately

As a restaurant owner, you cannot afford to overlook the importance of the proper classification of overtime-exempt workers. The reason is that improper classification of such employees will deal your bottom line a blow. In that case, you need to review the minimum wage laws and regulations in the Fair Labor Standards Act (FLSA).

That implies that workers covered by the FLSA must be paid overtime for the hours they work over 40 in a workweek if they are not exempt. The rate, in this case, should be not less than time and a half an employee’s regular pay. 


5. Tips Impact Payroll

Understand that the FLSA distinguishes tipped employees from non-tipped workers. The rule here is that anyone receiving over $30 monthly in gratuities either from fellow employees or customers is considered a tipped worker. As a result, tips can feature in a tipped employee’s salary as tip credits. Understand that the FLSA recognizes the tip credit.

The latter refers to the net amount of tips given to an employee who works out on a per-hour basis with a limit of $5.12 per hour. Ensuring that restaurant owners are reporting their employee tips accurately is the goal behind tip credits. 

For example, if your tipped worker makes $1 every hour in tips, you need to pay them at least $6.25 per hour to bring the employee’s total earnings to the federal minimum wage of $7.25 per hour. Also, note that tips over $20 in a month are subject to FICA taxes and federal income tax. 

So, although your employee may receive tips, you need to receive information about the same to include it on the worker’s W-2 form. A W-4 form with your worker’s full name and social security number will also be necessary when onboarding a new hire.



Opting to outsource your payroll services can put your restaurant back into your hands. Ultimately, that will give you time to focus on the things you love about running your establishment. You can get a free quote from your local New York restaurant payroll provider by contacting us today!