Restaurants have more moving parts in their books than most businesses. Credit card tips, cash handling, merchant processing fees, and tipped employee wages all need to track correctly or your financial statements won’t reflect reality.

Your POS system tracks gross sales, tips charged on cards, and cash transactions. Your bank deposit shows net card deposits after merchant fees plus whatever cash you deposited. These are different numbers. Treating your bank deposit as your sales figure is a common mistake that understates revenue and hides merchant fees in your books.

Record gross sales from your POS reports as revenue. Then record merchant processing fees as a separate expense. The net deposit to your bank account is what remains after fees. This keeps your revenue accurate and makes your merchant fee expense visible so you can evaluate whether you’re paying too much.

Tips charged on credit cards get deposited along with sales, but they’re not your money. They belong to your employees. How you handle tip payouts determines how they show up in your books. If you pay out card tips in cash at the end of each shift, you’re converting the card tip deposit into a cash outflow. Track this as tip payouts, which reduces your liability for the tips you received on behalf of employees. The cash drawer funds these payouts, which is why your cash deposit to the bank will be lower than your cash sales.

If you pay out tips through payroll instead of in cash, the tips stay in your bank account until payday. You’re holding them as a liability until the payroll run. This method creates cleaner records because everything flows through payroll with proper tax withholding documented.

Tipped employees in Texas can be paid a lower cash wage as long as tips bring their total compensation to at least minimum wage. Your payroll needs to track both the cash wages you pay and the tips reported by employees. Tips reported through payroll are subject to Social Security and Medicare taxes. You withhold the employee portion and pay the employer portion. If you’re paying out cash tips daily, employees still need to report those tips so payroll taxes are calculated correctly.

Make sure your payroll reports match what your POS shows for credit card tips. If your POS shows $4,000 in card tips for a pay period but your payroll reports show $3,200 in reported tips, something is wrong. Either employees aren’t reporting all tips or your systems aren’t synced properly.

At minimum, reconcile weekly. Pull your POS sales report, compare to bank deposits, account for merchant fees, and verify tip payouts match what was owed. Monthly reconciliation should tie your payroll reports to your POS tip reports and catch any drift before it becomes a bigger problem. Restaurants and bars that skip this step end up with books that don’t match their bank accounts and tax returns that don’t reflect actual operations.

Cash handling adds another layer. Cash sales minus cash tip payouts minus any register variance should equal your cash deposit. If it doesn’t, you have a tracking problem or a theft problem.

If your books are behind or you’ve been treating bank deposits as sales, you’ll need bookkeeping cleanup and catch-up services to get accurate financials. Sorting through months of misrecorded transactions takes time but gives you numbers you can actually trust for tax reporting and business decisions.