Service charges are percentage-based fees you can add to a customer's order to cover additional expenses, such as for a large event. This article will guide you through creating and applying service charges in Lightspeed Restaurant, ensuring regulatory compliance, and viewing reporting on service charges.

Service charges are different from credit card surcharges, which are used specifically to offset the cost of payment processing fees.

Complying with regulations

When implementing service charges, it's important to comply with all local legal requirements. In some regions, for example, it's prohibited to make any deductions when paying out service charges to staff.

Key considerations to make before using service charges include:

• Understand the law: Laws regulating service charges vary by region. Ensure you know how to handle service charges where you operate and if they must be distributed to staff, taxed, etc.
• Taxable or non-taxable: Service charges are taxed in Lightspeed Restaurant when you assign them to an accounting group with a positive tax rate. If tax does not apply to service charges in your area, use an accounting group with a 0% tax rate.
• Distribute fairly: If required to distribute service charges to your employees, do so fairly to prevent conflicts and ensure compliance with regional laws. When paying out this amount from a cash drawer, record a cash removal in the Restaurant POS app.
• Communicate your policies: Tell customers about any relevant service charges before starting their meal. Posting appropriate signage and including your service charge distribution policy on receipts is a good idea and may be required by law in some regions.

Speak with a tax professional to ensure you follow the correct rules for collecting and distributing service charges in your region. Laws are different in every area and can change over time.

Creating service charges

To create a service charge that you can add to orders, set up an item that's priced as a percentage in Lightspeed Restaurant.

1. Log in to the Back Office with your Lightspeed credentials.
2. From the navigation menu, select Menu management > Items.
3. Click Create > Single item.
4. Enter a name for the service charge and select an accounting group for it.

   The accounting group you choose will determine whether tax is applied to the service charge at the POS.

   • To apply tax, select an accounting group with a positive tax rate (i.e. over 0%).
   • To leave it untaxed, select an accounting group with a 0% tax rate.

   As long as it's greater than 0, the specific tax rate does not matter. When applied at the POS, the service charge will raise the price of each item by the percentage you set and apply the relevant tax rates for the order items.

5. Click Change price type.

   

6. Select the Price as a percentage option, then click Confirm.
7. In the Price as a percentage field, enter a percentage of the order's value to charge.

   

8. Configure the other item settings as desired.
9. Click Save.
10. Set up ways for staff to apply the service charge at the POS. You may use one or both of the following methods:
    • Add a button to your menu that staff can tap to manually apply the service charge.
    • Add the service charge to an order profile to automatically apply it when that order profile is selected at the POS.

Applying service charges

Depending on how you created a service charge, there are two ways you might apply it at the POS: by tapping a button or selecting an order profile.

1. Open an order on the Register screen and tap Pay.
2. If you added a service charge button to your menu, tap the button to apply the charge.

   

3. To apply a service charge associated with an order profile:
   1. Tap the order tag to select an order profile.

      

   2. Choose the order profile with the service charge to add it to the order. If the total changes, the service charge amount will update accordingly.

      

Reporting on service charges

Reporting on service charges is viewed differently depending on your level of access. POS users, like restaurant employees, check their service charges directly in the app. Back Office users, such as managers, can access more detailed reports through the Back Office.

POS users

POS users with the appropriate Report access settings can view a User report from the Restaurant POS app with their total service charges and other shift information. After clocking out, these employees are also prompted to print this summary.

Report access settings for user groups can be configured as follows:

• Can see their own reports: Employee can view only their own User report.
• Can see manager reports: Employee can view all POS reports for the business.
• Has no access to reports: Employee cannot view any POS reports.

The User report in the POS app

Back Office users

Back Office users with reporting access can view service charges in several key reports, including:

• Labor Report: Displays employee-specific data, including tips and service charges, alongside everyone's hours worked.
• Business Report: Shows total earned and declared tips for the business, alongside sales, taxes, service charges, and overall financial activity.
• Receipt Report: Used to look up individual orders and to edit or print receipts, including canceled or corrected ones.

The Business Report in the Back Office

What's next?