If “tip reporting” makes your blood pressure spike, you’re not alone. Get it wrong, and both you and your staff can face IRS scrutiny, audits, or even penalties.

 

Why Tip Reporting Is Tricky

  • Tips flow both in cash and through POS—often at different rates than hourly wages
  • Split tips, tip pools, and auto-gratuities can muddy the waters
  • Staff sometimes “forget” to report cash

 

How to Stay on the IRS’s Good Side

1. Make Reporting Easy
 Train staff to accurately declare tips—paper logs or digital forms both work.

2. Use Integrated Payroll Tools
 Let your payroll/accounting software handle tip allocation, deductions, and reporting.

3. Track All Scenarios
 From credit card splits to pooled jars, document everything.

4. Regular Reviews
 CPA audits mean errors get fixed sooner—before the IRS rings your bell.

 

The Bottom Line

When tips are tracked and reported correctly, everyone wins—your staff, your books, and your reputation. SkillBench brings tip compliance right to your front counter.