Tipping:
Designing a Tip-Recording System
SalonToday May 2001
Because tipping
continues to be the norm in most salons, the most pressing issue for
some owners may not be "to tip or not to tip," but rather how to create
a system to help the staff record tips. Joanne Jordan former owner and
consultant with Dreamcatchers Consulting shares the advice she offers
owners in designing a tip-reporting program.
1. Arrange a staff
meeting for the purpose of explaining and educating employees on reporting
tip income. Key points to discuss include: It is the law to report tips
totaling more than $20.00 received in a one-month period; you must report
the tip amount to your employer so that the employer can withhold the
appropriate taxes. As an owner, you are not responsible to monitor or
police employees' tips; it's up to the employees to accurately report;
underreporting could result in employees owing substantial taxes, penalties
and interest.
2. Handouts(published
by the Internal Revenue Service) for the meeting should include: Publication
531, Reporting Tip Income; Publication 1244, an Employees Daily Record
of Tips and Report to Employer; and Publications 3144 and 3148, Tips
on Tips (for employees and employers.)
3. Instruct employees
to keep a running log of tip income and maintain those records for four
years.
4. Post a written
policy in the salon or salon manual.
5. Meet with the
staff quarterly to review the tip reporting policy ans answer any questions
they may have.
6. Make sure all
new hires are informed of the policy during the interview process.
7. Educate employees
on the end result of reporting tips, which is really a benefit-they
are saving for retirement, they are building their financial record
which could help them achieve home and car loans, and they reduce the
risk if a tax audit.
