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Declaring tips

The tax declaration feature allows employees to report the total amount of tips they leave with at the end of a user shift. The declaration amount is important for tax and payroll purposes, especially if it differs from the total tips left on orders in the Restaurant POS app (for example, when servers tip out other staff). Non-server employees with POS access for the time clock, such as bussers, can also declare tips paid to them by co-workers.

After enabling tip declaration for a user group in the Back Office, the Restaurant POS app will prompt users to declare tips when clocking out. Declared tip amounts are available in Back Office and POS reporting.

Important: Tax laws are different in every region and can change at any time. We recommend consulting a tax professional for specific advice regarding tip declaration and reporting in your region.

Table of contents:

Why declare tips?

Important: Tax laws are different in every region and can change at any time. We recommend consulting a tax professional for specific advice regarding tip declaration and reporting in your region.

Employees are required by law in many regions to declare the total tips they take home and report this amount to their national tax agency. Regulations are different for every country, so it is important to research the particular rules for your region. For example, visit the website of the IRS (United States) or CRA (Canada) for guidance on tracking and reporting gratuity in those countries.  

To learn more about why you should declare tips, see our blog post Should I Be Claiming All Of My Tips? Advice for Restaurant Servers.

Enabling tip declaration

Enable the tip declaration setting in the Back Office for specific POS user groups to prompt users in those groups to enter their total tips received when clocking out at the POS.

  1. Log in to the Back Office with your Lightspeed Restaurant account credentials.
  2. From the navigation menu, go to Configuration > Users > POS user groups.
  3. In the Actions column, click the down arrow and select Configure next to a user group.
  4. Enable the Allow users to declare tips when clocking out setting in the User float settings section.
    To learn about the other available user float settings, see Adding user group roles.
  5. Click Save to save changes.
  6. (Optional) Repeat steps 1–5 to enable the feature for additional user groups.
    k-series-back-office-user-group-declare-tips-setting.png

Declaring tips at the POS

After enabling tip declaration, the Restaurant POS app will prompt employees in relevant POS user groups to declare a tip amount when clocking out. Servers should enter the total tips they took home via all payment methods after paying out tips to other staff, and non-server employees should enter their total tips received. 

To view the tips a user processed in the Restaurant POS app, visit the Payments list or print a User report before clocking out. This amount may differ from the actual amount a user should declare if they received tips outside the POS app or paid out tips to other employees. 

  1. In the Restaurant POS app, tap Clock in/out on the Home screen.
  2. Select the user who will be clocking out.
  3. If prompted, the user enters their PIN code or scans their QR code.
  4. If prompted, count and close the cash drawer float. Visit our Counting a cash float article for detailed steps. 
  5. Tap Yes to clock out and end the user shift. 
  6. Enter the amount of tips to declare and tap Done, or tap Skip to proceed with the amount as zero.
    Important:
    • The amount declared should reflect the total tips taken home by the employee via all payment methods after paying out tips to other restaurant staff.
    • Bussers, greeters, and other employees who receive tips from servers should enter their total amount received.
    • Tips can only be declared when clocking out, and declaration amounts cannot be changed later.
    restaurant-pos-tip-declare-enter-amount.png
  7. Tap Yes or No to decide whether to print a summary of the user's shift.
    Also known as a User report, this summary contains information about the user's shift, such as their declared tips, tips processed in Restaurant POS, sales, payments, and other details.
  8. Report declared tips to the tax authority for your region as required. For more information, see Why declare tips?.

    Important: Tax laws are different in every region and can change at any time. We recommend consulting a tax professional for specific advice regarding tip declaration and reporting in your region.

Reporting for declared tips

Declared tips are available on two different Lightspeed reports: the User report in the Restaurant POS app and the Staff report in the Back Office. To learn more about each report, visit the following articles: 

What’s next?

Sales staff who access the Register screen also have access to certain user settings, according to their user type. See Understanding user settings to learn more.

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