In the latest issue of Floral Management, accounting expert Paul Goodman, PFCI, offers guidelines for handling tipping.
Accepting tips has long been how restaurant workers make a living. Recently, the practice has become more prevalent at flower shops. In the latest issue of Floral Management, accounting expert Paul Goodman, PFCI, offers guidelines for handling tipping.
“When you think of tipping, you normally think of restaurants, delivery drivers, or barber shops and salons, but the pandemic sparked the trend of consumers and businesses thinking about tipping more broadly,” Goodman says. Most often, tips come through the website, rather than a physical jar on the checkout counter, he explains. (Some florists have added a prompt during the checkout process asking customers if they’d like to leave a tip, with suggested amounts of $3, $5, $8, $10 or a personalized amount.)
Accounting for Tips
“Keeping track of who designed what arrangement and who delivered each order that had a tip attached creates a lot of work,” Goodman says. His suggestion? Create a tip pool and divide between employees — excluding management. Divide the total amount by the number of hours worked for a set period to determine an hourly rate for tips. Then, multiply that rate by each employee’s hours worked to determine their share. (For example, if the tip pool has $1,000 in it and nonmanagement employees worked 1,000 hours, the hourly tip rate would be $1. Someone who worked 40 hours that period would receive $40.)
The tips need to be included in the shop’s payroll tax calculations with each payroll period and in each employee’s W2. Goodman suggests adding the tip to the wages and including the tip with payroll. If, however, doling out cash keeps employees motivated, add the tip to the wage calculation and then subtract it as an advance on the payroll records. (This might also require more frequent runs to the bank to get cash.) “It’s well worth the extra effort to give cash given the impact it has on employee morale,” Goodman says.
How often should you distribute tips?
Handing out a couple of dollars doesn’t have much impact. Many florists distribute quarterly when tips have accrued to a meaningful amount. If you collect a lot of tips, however, you could distribute more frequently, Goodman says, adding “don’t forget to mention that when talking with job candidates about their wage expectations.”
For more advice on tipping, including how to create a shop policy fortips, read “Tips for Tipping” in the May/June issue of Floral Management.
Katie Vincent is a senior contributing editor for the Society of American Florists.
