Tip Management: Setup Your Tip Calculation

Save time and eliminate Tipping mistakes by creating automated rules to calculate paid and owed tips. Accounts using 7punches , supported POS integrations, or Tip Pooling will be able to send their tip data to 7shifts and include it when processing payroll.


⚠️ Prerequisites

⚠️ This feature may require an upgrade from your current plan.

⚠️ Tip Calculations require tip data from Time Clocking. Click here to ensure it has been set up.

⚠️ Only Admins can access and manage Tip Management settings.

Setup Tip Calculation 
Reports and Tip Calculation


Tip sources will vary by POS system and Payroll provider. Here's a list of terms you may encounter during your tips calculation setup journey, and their definitions:

Tips Earned - Tips that an employee receives during a given pay period. This can include pooled tips, declared cash tips, credit card tips, auto gratuities, etc. This figure will be visible to the employees, so they can see the total value of tips they will have received in that period.

Tips Owed - The total amount of tips that an employee has earned but has not yet received. This can occur in scenarios where tips are pooled and distributed at a later date, or if there is insufficient cash on hand to pay tops at the end of a shift. 

Tips Paid - These will be the tips that have already been paid to employees, prior to payroll (for example: cash tips), and are typically used for tax purposes.

Tips Out - Distributed tips from our Tip Pooling feature.

Tips In - Contributed tips from our Tip Pooling feature.

Setup Your Tip Calculation

  1. Login as an Admin.
  3. In the left navigation bar, head to Tip Management > Settings.

  4. Select Set your tip calculation:

  5. Click Set up.

    If you have multiple Locations, choose a Location from the dropdown menu that you would like to set up > click Add:

    Screenshot 2023-11-29 at 4.19.55 PM.png

  6. Configure how you pay Tips!

    Customize your equations for this Location by selecting which tip sources you want to be included, and which ones you wish to deduct. The formulas you set here will determine how tip data will surface in the Worked Hours and Wages Report, and your integrated payroll export.

    Here's an example of an account that pulls tip data from Toast POS + Tip Pooling + 7punches: 

    Screenshot 2024-01-05 at 9.59.30 AM (1).png

    Taking a closer look, you'll set up which tip sources are to be Paid (show in green) and Deducted (shown in red). We'll show you your final equation based on your selections: 

    Pro Tip!

    The tip sources available for you to choose from are dependent on which features you have enabled in your account:

    1. POS
    2. Tip Pooling 
    3. 7punches

    To learn more about enabling and including these tip sources, click here.

    And here are some examples !

  7. When you're ready, hit Save and preview changes. You'll be able to preview your tip calculation and how it will appear for your employees:

    Screenshot 2023-10-31 at 10.21.00 AM.png 

  8. If you have multiple Locations, you'll save time setting them up as we will default the last Location's configuration when creating a new Location.

Reports and Tip Calculations

Now that you have a complete setup for Tips Calculation, you can export and transfer your tip data by whichever method you choose: 

Resources & Examples

Here are a few examples you can reference on how other accounts have set up their custom Tip Calculation equation:

POS + Tip Pooling.
All tips are paid before payroll, except for pooled tips, which are paid on payroll. Contributions to a tip pool are deducted.

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Tip Pooling Manual
The equation: Only tips from the manually contributed tip pools are paid on payroll. No other tips are paid before payroll.



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