The Best Payroll Software for Restaurants in 2025

You know the drill. Sunday night rolls around, and instead of prepping for the week ahead, you're hunched over spreadsheets calculating split tips, overtime rates, and making sure you didn't accidentally short someone on their paycheck. Again.

Payroll software for restaurants isn’t one-size-fits-all. Generic payroll software fails restaurants because it can't handle your reality: tipped wages that vary nightly, employees working multiple roles at different pay rates, complex tip pooling, and labor laws that apply differently to tipped workers. 

The wrong system wastes hours of your time and puts you at risk for costly violations when staff paychecks are wrong.

Restaurant payroll software built for the industry eliminates manual calculations, handles tip compliance automatically, and keeps you on the right side of labor laws—so you can focus on running your restaurant instead of wrestling with payroll every week.

TL;DR: The best payroll software for restaurants in 2025

Restaurant payroll software automates tip calculations, handles complex labor law compliance, and integrates with your existing POS and scheduling systems to save hours of administrative work each week.

Top payroll software for restaurants in 2025:

• Best for small-medium restaurants and hourly teams: Homebase - Scheduling + payroll in one 
• Best for growing restaurants: Gusto - User-friendly with strong benefits 
• Best for larger restaurants: ADP - Enterprise-level HR support 
• Best for Toast POS users: Toast Payroll - Seamless POS integration 
• Best for Square POS users: Square Payroll - Simple and affordable 
• Best for 7shifts users: 7shifts Payroll - Unified scheduling and payroll
• Best for restaurant groups: Paycor - Scalable with advanced reporting 

Must-have features: Tip credit compliance, integrated time tracking, automatic tax filings, direct deposit options, and restaurant-specific labor law support. 

Choose payroll software built for restaurants over generic business solutions—the compliance requirements and tip calculations are too complex for one-size-fits-all systems.

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Key payroll challenges in the restaurant industry

Restaurant payroll is uniquely challenging—even the best payroll software for restaurants has to tackle these specific pain points that keep restaurant owners up at night.

Managing tips, tip pooling, and tip credits

Tips aren't just extra money for your staff—they're a complex web of calculations, compliance rules, and potential legal landmines. You're tracking cash tips, credit card tips, and tip pools that need to be distributed accurately across servers, bussers, and kitchen staff.

Then there's the tip credit maze. You can pay tipped employees less than minimum wage, but only if their tips make up the difference. Miss that calculation, and you're liable for back wages. 

The US Department of Labor recovered more than $35 million in back wages for food service workers, highlighting how common payroll errors can be in the restaurant industry.

Tracking variable schedules and shift-based pay

Your servers don't work Monday through Friday, 9 to 5. They work doubles, split shifts, and weekend rushes—one person might be a host during lunch and a server at dinner with different pay rates for each role. Variable schedules mean variable pay calculations where shift differentials, role-based wages, and accurate time tracking become critical when someone's paycheck depends on whether they worked the busy Friday night shift or slow Tuesday lunch.

Handling overtime and labor laws

Overtime rules for restaurants are trickier than most realize. Tipped employees have different overtime calculations than kitchen staff, and some states require overtime after 8 hours daily while others use 40 hours weekly. 

Factor in break requirements, meal period rules, and state-specific labor laws, and it's easy to see why many restaurants struggle with compliance. Top payroll software for restaurants should handle these variations automatically.

Onboarding and offboarding high-turnover staff

According to the U.S. Chamber of Commerce, the hospitality industry has a quit rate of 4.1%—nearly double the rate of wholesale and retail at 2.3%. That means you're constantly hiring, onboarding, and processing final paychecks for departing employees.

Each new hire needs tax forms, direct deposit setup, and proper documentation, while mid-shift quitters need accurate final pay calculations including accrued tips and owed wages. 

High turnover makes efficient onboarding and offboarding essential, not optional—which is why restaurant HR software often includes robust onboarding features.

Multi-location or franchise operations

Multiple locations multiply every payroll challenge with different pay scales, local tax requirements, and labor law variations. You need visibility across all locations while maintaining accurate, location-specific payroll processing. 

Even franchise operations add corporate reporting requirements and standardized processes that must accommodate local variations.

Reporting for taxes, benefits, and deductions

Restaurant payroll reporting goes beyond basic tax filings—you're tracking tip reporting for tax compliance, managing benefit deductions, and potentially handling garnishments or court-ordered deductions. 

Year-end reporting becomes particularly complex with tip income, multiple pay rates, and varying work locations all factored into W-2 preparation.

Integration with time clocks and POS systems

Your POS system tracks when employees clock in and out. Your scheduling software shows who's supposed to work when. But if your restaurant payroll software can't talk to these tools, you're manually entering data and creating opportunities for errors.

Seamless integration means accurate time tracking, automatic meal break deductions, and payroll calculations that reflect actual hours worked—not just what was scheduled.

What to look for in restaurant payroll software

Not all payroll software is built for restaurant operations. The best restaurant payroll software should handle industry-specific challenges that generic systems can't manage. Here's what actually matters when you're evaluating options.

Tip reporting and compliance with FLSA

The Fair Labor Standards Act (FLSA) sets federal wage and hour standards, including complex rules about tipped employees that restaurants must follow. Your restaurant payroll software needs to handle tip calculations, tip pooling distribution, and tip credit compliance automatically.

Look for systems that track both cash and credit card tips, calculate whether tip credits are valid, generate required tip reporting, and flag potential FLSA violations before they become expensive problems.

Integrated time tracking and scheduling

The best payroll software for restaurants connects directly to your existing time clock and scheduling systems, eliminating manual data entry and reducing errors. 

Look for tools that handle role-based pay rates, shift differentials, and automatic break deductions based on your state's requirements—this integration separates restaurant-specific solutions from generic payroll systems.

Direct deposit and pay card options

Your staff wants their money fast and convenient. Direct deposit should be standard, but pay cards are valuable for employees without bank accounts, and some systems offer same-day or next-day pay options that help with retention. Multiple payment options show you understand your team's needs and can be a competitive advantage in hiring.

Automatic tax calculations and filings (federal, state, local)

Tax compliance isn't optional, and manual calculations are error-prone. Your restaurant payroll services should automatically calculate federal, state, and local taxes, then file and pay them for you. This includes handling tip income reporting, multi-state tax requirements, and staying current with changing tax rates—the best restaurant payroll software eliminates tax compliance headaches entirely.

New hire onboarding and document collection

With high turnover, efficient onboarding saves hours each week. Look for HR software for restaurants that sends digital onboarding packets to new hires, collects required documents electronically, and guides employees through tax form completion. 

The faster you get someone from hire to first paycheck, the better their initial experience with your restaurant.

Labor cost reports and insights.

Understanding your labor costs helps you make better scheduling and staffing decisions. Your payroll software for hospitality should provide reports on labor cost as a percentage of sales, overtime trends, and department-specific costs. These insights help you optimize staffing levels and identify overspending areas—the best payroll service for restaurants includes robust reporting that actually helps you run your business better.

Integration with POS systems like Toast, Square, Clover.

Toast, Square, and Clover are among the most popular POS systems in the restaurant industry because they're built specifically for food service operations. Since these systems already capture time clock data and sales information, payroll software that integrates with them eliminates double data entry and ensures accuracy. 

When evaluating payroll systems for restaurants, prioritize solutions offering seamless integration with your existing POS system.

Cloud-based access for managers and accountants

Restaurant management doesn't happen from behind a desk. You need payroll access from your phone when you're on the floor, and your accountant needs access for month-end reporting. Cloud-based systems give you flexibility while maintaining security and ensuring everyone has access to current information. 

HR support and document management

Payroll questions don't wait for business hours. Look for providers offering HR support for compliance questions, policy guidance, and problem resolution. Document management capabilities help you store employee files, track performance reviews, and maintain documentation needed for labor law compliance—this is where hospitality payroll services often provide the most comprehensive support.

Best payroll software for restaurants in 2025

The right payroll software eliminates manual calculations, reduces compliance risks, and gives you back the time you're currently spending on spreadsheets and tax forms. These seven options stand out for their restaurant-specific features, reliable support, and ability to handle the unique challenges of food service payroll.

Homebase

Best for: Small to medium restaurants with hourly staff who need scheduling, time tracking, and payroll in one platform.

Homebase was built specifically for businesses with hourly employees, making it a natural fit for restaurants. The platform combines employee scheduling, time tracking, team communication, and payroll processing in one system—eliminating the need to juggle multiple tools.

Key features:

• Integrated scheduling and timesheets: Schedule shifts and track hours in one place, with automatic payroll sync
• Automated payroll: Run payroll with wages, tips, breaks, and overtime calculated automatically
• Direct deposit and printable checks: Pay employees via direct deposit or printed checks
• Tip management: Easily track and pay out tips with built-in tip pooling calculations
• Automated tax calculation, filing, and payment: Stay compliant with automatic tax handling
• Integrations with POS systems like Clover and Lightspeed

Pricing: Payroll is available as an add-on at $39/month base fee + $6/month per active employee. Homebase’s regular plans come with a 14-day free trial of the All-in-One plan: 

• Basic: Free for 1 location, up to 10 employees
• Essentials: Starting at $24/location/month, unlimited employees
• Plus: Starting at $56/location/month, unlimited employees
• All-in-One: Starting at $96/location/month, unlimited employees 

Why it works for restaurants: Homebase understands restaurant operations. The scheduling features handle variable shifts, the payroll system manages complex tip calculations, and everything syncs automatically. You're not paying for enterprise features you don't need.

Gusto

Best for: Growing restaurants (5-100 employees) that need user-friendly payroll with strong HR and benefits support.

Gusto combines intuitive design with comprehensive payroll and HR features. The platform is particularly strong for restaurants that want to offer competitive benefits packages to attract and retain staff.

Key features:

• Automated payroll: Unlimited payroll runs and automatic tax filings
• Employee self-onboarding: New hires can enter their own information online, reducing administrative work
• Time tracking and PTO management: Track time and manage paid time off
• Benefits administration: Manage health and retirement benefits
• Multi-state payroll: Support for payroll in all 50 states

Pricing: 

• Simple: $49/month + $6/month/person
• Plus: $80/month + $12/month/person
• Premium: $180/month + $22/month/person
• Free plan available for the first 6 months for contractor-only businesses

Why it works for restaurants: Gusto's self-onboarding feature is valuable for high-turnover environments, and the benefits administration helps restaurants compete for quality staff. The interface is intuitive enough that managers can handle payroll without extensive training.

ADP

Best for: Larger restaurants or multi-location operations that need comprehensive HR support and compliance expertise.

ADP offers enterprise-level payroll with extensive HR support and compliance features. While it's more complex than other options, it provides the depth larger restaurant operations need.

Key features:

• Automated payroll: Handles payroll, taxes, and compliance with robust reporting
• Live HR support: Access to HR professionals for guidance on complex issues
• Proactive compliance alerts: Stay updated on changing labor laws
• Employee self-service: Employees can access pay stubs and tax documents online
• Garnishment payment services: Manage wage garnishments easily

Pricing: Custom pricing available depending on your needs.

Why it works for restaurants: ADP's live HR support is valuable for navigating complex labor law issues. The compliance alerts help prevent costly violations, and the robust reporting supports multi-location management needs.

Toast Payroll

Best for: Restaurants already using Toast POS who want seamless integration between point-of-sale and payroll systems.

Toast Payroll is designed specifically for restaurants and integrates directly with Toast's POS system. This tight integration eliminates manual data entry and ensures accuracy between sales, tips, and payroll.

Key features:

• POS integration: Syncs payroll with sales and tips from Toast POS automatically
• Automated payroll: Run payroll and calculate taxes automatically
• Tip management: Track and distribute tips accurately based on POS data
• Employee self-service: Employees can view pay stubs and W-2s online
• Compliance management: Keeps up with restaurant-specific labor laws

Pricing: Payroll is available as an add-on; pricing starts at $69/month + $9/employee/month

Why it works for restaurants: The seamless Toast POS integration is unmatched for restaurants already using Toast. Tip calculations are automatic and accurate, and the system understands restaurant-specific payroll needs.

Square Payroll

Best for: Small restaurants and cafes using Square POS or Square time tracking systems.

Square Payroll offers straightforward payroll processing with integration to Square's ecosystem. It's particularly appealing for smaller operations that want simplicity and competitive pricing.

Key features:

• Automated payroll: Run payroll with automatic tax calculations
• Timecard integration: Syncs with Square's time tracking system
• Employee self-service: Employees can manage their info and access pay stubs
• Contractor payments: Pay both employees and contractors through the same system
• Compliance management: Handles tax filings and compliance

Pricing: 

• Full-service payroll: $35/month + $6/month per employee
• Contractor-only payroll: $6/month per contractor.

Why it works for restaurants: Square's ecosystem integration makes it easy for restaurants already using Square POS. The pricing is competitive for smaller operations, and the system handles both employees and contractors.

7shifts Payroll

Best for: Restaurants already using 7shifts for scheduling who want to add integrated payroll, or restaurants seeking a unified scheduling and payroll solution built specifically for the industry.

7shifts Payroll eliminates the data export headaches that come with using separate scheduling and payroll systems. The system was designed by people who understand restaurant operations, and it shows.

Key features:

• Unified scheduling and payroll: Manage shifts, time tracking, and payroll in one platform with automatic data sync
• One-click payroll processing: Calculate wages, breaks, overtime, tips, taxes, and PTO with one click
• Mobile employee onboarding: Employees can onboard via mobile app in about 10 minutes
• Benefits marketplace: Access to health insurance, 401(k) plans, and workers' compensation through integrated partners
• Dedicated payroll expert: Free implementation support and ongoing assistance from payroll specialists

Pricing: $39.99/month per location + $6/month per employee paid

Why it works for restaurants: 7shifts Payroll integrates with time clocking and tip payouts, automatically pulling in hours worked and tips paid out so you can run payroll confidently knowing wages and taxes are accurate. 

Paycor

Best for: Growing restaurant groups that need scalable HR and payroll solutions with advanced reporting.

Paycor offers comprehensive HR and payroll features designed to scale with growing businesses. It's particularly strong for restaurant groups that need detailed reporting and analytics.

Key features:

• Automated payroll: Handle payroll, taxes, and compliance with detailed reporting
• HR tools: Includes onboarding, benefits, and employee management
• Time and attendance: Track hours and manage attendance
• Reporting and analytics: Access detailed payroll and HR reports
• Mobile app: Manage payroll and HR on the go

Pricing: Custom pricing based on business size and needs.

Why it works for restaurants: Paycor's reporting capabilities help restaurant groups analyze labor costs across locations. The HR tools support growing operations that need more sophisticated employee management.

How to do payroll for a restaurant: Step-by-step

Running restaurant payroll manually is complex, but understanding the process helps you evaluate whether your current system is working efficiently. Here's how it should work.

Collect employee hours from POS or time clock.

Start by gathering actual hours worked from your time tracking system, including regular hours, overtime, and any shift differentials or role-based time tracking—and review for obvious errors like someone clocking 16 hours in a single day. 

If your POS system integrates with payroll software, this data transfers automatically. Otherwise, you'll need to export and import time records, creating opportunities for manual entry errors.

Calculate tipped wages, overtime, and base pay.

Calculate base wages for each pay period, then add tip income and apply tip credits where applicable, remembering that tipped employees have different overtime calculations than non-tipped staff—their overtime rate is based on full minimum wage, not the reduced tipped minimum. 

Factor in bonuses, shift differentials, or role-based pay rates, ensuring someone who worked as both host and server gets accurate wages for both roles at their respective pay rates.

Apply deductions (taxes, benefits, garnishments).

Calculate federal, state, and local tax withholdings based on each employee's W-4 and current tax rates, then apply benefit deductions for health insurance, retirement contributions, or other authorized voluntary deductions. 

Handle court-ordered garnishments or mandatory deductions according to legal requirements and priority rules, following specific federal guidelines about which garnishments take precedence when multiple orders exist for the same employee.

Ensure tip reporting and FLSA compliance.

Verify that tip credits are valid by ensuring tipped employees earn at least minimum wage when combining base pay and tips—if they don't, you owe the difference and must make up the shortfall in their paycheck. 

Generate tip reporting for employees and ensure all tip income is properly documented for tax purposes, including both cash tips that employees report and credit card tips you can track directly from your POS system.

Generate payroll reports and pay stubs.

Create detailed pay stubs showing regular hours, overtime hours, tips, deductions, and net pay since employees need this information for their records and potential loan applications, and you're legally required to provide it in most states. 

Generate internal reports showing total labor costs, department breakdowns, and compliance issues that need attention—these help you spot trends like excessive overtime or departments consistently running over budget.

Submit payroll taxes and filings.

File and pay federal, state, and local payroll taxes according to required schedules (typically monthly or quarterly depending on payroll size), including income tax withholdings, Social Security and Medicare taxes, and unemployment taxes. 

Submit required tip reporting to the IRS and maintain records for potential audits, keeping detailed documentation of all payroll calculations, especially tip credit applications, since these are common audit targets.

Distribute pay via direct deposit or check.

Process payments through direct deposit, pay cards, or paper checks according to each employee's preference. Ensure payments arrive on your scheduled payday—late payroll can trigger state penalties and damage employee morale.

Provide access to pay stubs and year-end tax documents through employee self-service portals when possible. This reduces administrative work for you and gives employees 24/7 access to their payroll information.

Payroll software vs. payroll service: Which is better for restaurants?

Choosing between DIY payroll software and full-service payroll depends on your restaurant's size, complexity, and how much you want to handle in-house.

Pros and cons of using DIY software.

DIY payroll software gives you control and typically costs less per payroll run. You can process payroll on your schedule and make adjustments immediately when needed.

The downside? You're responsible for staying current with tax law changes, handling compliance issues, and troubleshooting problems. If you make an error, you're liable for the consequences.

DIY works best for single-location restaurants with straightforward payroll needs and owners who don't mind handling the administrative details.

When to outsource to a full-service provider.

Full-service payroll handles everything from tax calculations to government filings and compliance monitoring. You get expert support and protection from costly errors.

This option makes sense for multi-location operations, restaurants with complex tip pooling arrangements, or owners who prefer to focus on operations rather than payroll administration.

The trade-off is higher costs and less immediate control over payroll processing and adjustments.

Hybrid options: software + managed support

Many modern payroll providers offer hybrid solutions—software you control with expert support when you need it. You get the efficiency of technology with access to compliance expertise and problem resolution.

This middle ground works well for growing restaurants that need more support than basic software provides but don't want to completely outsource payroll control.

FAQs about payroll software for restaurants

What payroll system do restaurants use?

Most successful restaurants use industry-specific payroll systems like Homebase, Gusto, or Toast Payroll rather than generic business software. These platforms handle tip calculations, variable schedules, and restaurant compliance requirements that standard payroll software can't manage effectively.

What is the best payroll service for restaurants?

The best payroll service depends on your restaurant's size and existing systems. Small to medium restaurants benefit from integrated solutions like Homebase that combine scheduling, time tracking, and payroll. Larger restaurant groups often choose ADP or Paycor for advanced reporting and multi-location management.

What is the best billing software for restaurants?

For customer billing, most restaurants use POS systems like Toast, Square, or Clover rather than separate billing software. These systems handle orders, payments, and basic customer management in one platform designed for restaurant operations.

Can I use generic payroll software for my restaurant?

Generic payroll software lacks restaurant-specific features like tip pooling, FLSA compliance for tipped workers, and variable pay rate calculations. You'll waste time on manual calculations and risk costly compliance violations. Restaurant-focused payroll software is worth the investment.

How do I handle tip credits in payroll?

Tip credits let you pay tipped employees below minimum wage if their tips make up the difference. Your payroll system should automatically verify that each employee's combined wages and tips meet minimum wage requirements, then adjust their pay if needed. Requirements vary by state, so ensure your software handles local compliance rules.

The best payroll system for your restaurant

The right restaurant payroll software eliminates Sunday night spreadsheet sessions and keeps you compliant with complex labor laws. Choose a system built specifically for restaurants—generic payroll software can't handle tip calculations and variable schedules effectively.

Test before you commit. Most providers offer free trials, so you can see how the software handles your specific payroll scenarios.

Ready to streamline your payroll process? Homebase combines scheduling, time tracking, and payroll in one platform built for hourly teams. Try Homebase free for 14 days—no credit card required.

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