Best Payroll Software for Restaurants (2026)

Restaurant payroll is regular payroll plus tips, and tips are where it goes wrong: tip credits, tip pools, cash tips nobody reported, and a new set of W-2 rules for 2026. I'm Gusto Payroll Certified and hold Intuit's QuickBooks payroll certification, so here's how the main options handle the restaurant-specific parts.

The comparison at a glance

1. Toast Payroll: best if you're on Toast

If your restaurant runs on Toast, its payroll has the shortest path from the POS to a paycheck. Clock-ins, clock-outs and tips come straight from the POS, and Toast Tips Manager handles tip pools by job, by hours or by sales category, then syncs the results into payroll. Toast also calculates tip credits against minimum wage and tracks cash versus card tips. As of 2026, Toast Payroll has its own sync into QuickBooks Online, so payroll can post to your books without re-keying. Toast Payroll

2. Square Payroll: best for Square cafes and counter service

Square Payroll imports card tips from Square POS for W-2 employees. You choose whether tips go directly to the person who earned them, are pooled per transaction, or are pooled by hours worked, and you can mark imported tips as already paid out in cash or included in the paycheck. For a coffee shop or counter-service spot already on Square, that's hard to beat for simplicity. Square tip importing

3. Gusto: best for any POS, with HR built in

Gusto works no matter what POS you run. It handles both kinds of tips (cash tips employees already took home, and paycheck tips you pay out through payroll), supports service charges, and calculates the FLSA tip credit automatically, flagging when you owe make-up pay because wages plus tips fell short of minimum wage. It also covers onboarding, benefits and employee self-service. The trade-off: unless your POS integrates, someone enters tip totals each pay run. Our payroll service is built on Gusto, and I'm Gusto Payroll Certified. Gusto tip credits

4. QuickBooks payroll: fine for simple tip setups

QuickBooks payroll, now called QuickBooks Workforce, keeps payroll in the same system as your books. It has pay types for cash tips and paycheck tips. What it doesn't have is an automatic tip-credit calculation: you set a tipped rate up as its own hourly rate and check make-up pay yourself. That's workable for a handful of tipped employees and a lot of manual checking for a full dining room. My full breakdown is in Gusto vs QuickBooks Payroll. QuickBooks tips help

5. RUN Powered by ADP: best if you want a large provider

RUN is ADP's payroll for small businesses, and it deducts and files federal, state and local payroll taxes for you. Time tracking is included and scheduling is an add-on. For restaurants, tips usually reach RUN through connectors in ADP's app store, such as the 7shifts connector or Flexspring's POS integration, which brings in tip summaries from systems like Toast, Aloha and TouchBistro. It makes the most sense if you're already on ADP or want one big provider for payroll, HR and add-ons. On the books side, one ADP payroll can hit your bank as several withdrawals, which is covered in ADP payroll bookkeeping. RUN Powered by ADP

6. Homebase: scheduling, time clock and payroll in one

Homebase builds payroll on top of its scheduling and time clock, so pay runs come from the hours staff actually clocked. It files payroll taxes, supports tip pooling, applies the tip credit with automatic top-ups when wages plus tips fall short, and blocks the tip credit in states that don't allow one. It also calculates the figures you need to claim the FICA tip credit. Tips sync from Clover or Square. Homebase restaurant payroll

7. 7shifts: best if you already schedule in 7shifts

7shifts started as restaurant scheduling and now runs its own US payroll through its partner Check Technologies, which files and pays the payroll taxes. Payroll pulls in timesheets and tips, and 7shifts connects to more than 35 POS systems, including Toast, Square and Clover. It handles tip pooling and calculates tip credit and shortfalls once a POS tip feed is connected. It doesn't produce a FICA tip credit report, so your accountant works from its reports to complete Form 8846. 7shifts Payroll

Tip rules every restaurant payroll has to get right

• Tip credit. Federal law lets you pay tipped employees a cash wage as low as $2.13 an hour if tips bring them to at least the $7.25 federal minimum. If they fall short, you make up the difference. Many states set higher minimums, and some don't allow a tip credit at all, so check your state first. DOL tipped employees fact sheet
• Employees report tips. Employees who get $20 or more in tips in a month have to report them to you, and those tips go through payroll for tax withholding. IRS Publication 531
• FICA tip credit. The employer's share of Social Security and Medicare paid on tips can come back as a federal tax credit on Form 8846. It's easy to leave on the table. Ask your CPA. IRS Form 8846
• Form 8027. A food or beverage business where tipping is customary and more than 10 employees normally work on a typical day files an annual tip report on Form 8027. IRS Form 8027
• New for 2026: tips on the W-2. The federal "no tax on tips" deduction lets eligible employees deduct up to $25,000 of qualified tips. Starting with 2026 wages, employers report cash tips on the W-2 in Box 12 with code TP, plus the employee's tipped-occupation code. Make sure your payroll provider supports it. IRS: no tax on tips. I walk through the payroll setup to check in a free webinar on January 12: Tips, Overtime & Your 2026 W-2s.

How payroll should hit your books

Whichever provider you use, the bookkeeping side is the same. Tips your guests paid by card are a liability until they're paid out to staff, not restaurant income. Gross wages, employer taxes and tip payouts each post to their own accounts, and the payroll liability accounts should come back to zero after each tax deposit. Split front-of-house and back-of-house labor so your prime cost means something. For the full picture, see the restaurant bookkeeping guide.