Costa Mesa, CA, April 04, 2013 --(PR.com
)-- CardFlex (www.cardflexnow.com), a leading prepaid card provider and developer of TipCentral, an automated tip management system, notes that there was a time when both employees and employers of hospitality businesses such as restaurants could get away with being somewhat lax in IRS tip reporting. But those days are gone. With billions of dollars in tips going unreported every year, the IRS has clearly signaled that hospitality establishments and their tipped employees will be required to keep an accurate account of all earned wages.
Restaurants are allowed to give employees a month to report their tips, but by doing so the IRS can estimate staff tips until they’ve been officially reported. These are calculated by estimating the tips placed on credit cards, and can cause confusion for employees when it comes to IRS tip reporting.
Restaurants and other hospitality businesses are required to report tips due to their FICA liability. If they fail to comply with IRS reporting requirements, these establishments place themselves at a high risk for audits. Some businesses enter into agreements with the IRS that state they will accept tip estimates in exchange for agreeing not to audit them and their employees.
Regardless of your type of business, you undoubtedly want to reduce your tax liabilities and avoid costly IRS levies. While you can sign-up for an IRS tip reporting agreement, that still doesn’t relieve your establishment of the daily challenge associated with managing all tips and tips-outs. Innovative tip management systems that automate the entire tip process are becoming the preferred method of paying tips for forward-thinking hospitality businesses. These systems accurately track tips and then automatically deposit them to prepaid employee debit cards. This eliminates the hassles and imprecision inherent with cash, and leaves a digital paper trail to ensure IRS tip reporting and compliance.
Benefits of TipCentral, an automated tip management system, include:
· Electronically depositing all employee wages and tips
· Huge time and money savings
· Better cash management
· Increased flexibility and security
· Accurately tracking, reporting, and paying tax liabilities
· Giving employees instant access to their money without having to carry large sums of cash
It’s not news that being in complete compliance with all IRS tip reporting rules and requirements is critical. But it may be news for some hospitality businesses that the IRS is cracking down on taxes relating to all forms of tipping. Since tips are the life-blood of most hospitality establishments, ensuring that both businesses and their tipped employees fully pay their taxes is more important than ever.
If your business wants to track tips more effectively or you’re worried about IRS compliance, see how you can save time and money, improve safety and security, and increase employee satisfaction with TipCentral. This automated tip management system developed by CardFlex makes IRS tip reporting easier and is changing the way hospitality businesses do business. Learn more about TipCentral by visiting www.CardFlexNow.com or calling 866.634.3044.