was tipping at restaurants common in the old days?

[HudsonHawk]

In a situation like this, it's important to remember that the slow service is probably not server's fault. If a restaurant is really busy, the bartenders and kitchen are usually slammed, which can cause a delay getting orders ready. Servers usually run food and drinks to tables the very second they are ready.

"In the weeds." Which is why you try to stagger tables for servers, so that everyone is not wanting drinks at the same time, their food coming out at the same time, wanting their checks at the same time, etc. But sometimes it's just the way it is.

 

[LuvMyMan]

I just now realized, the topic about tipping back in the day...yes....people did tip back then.

 

[Guttersnipe]

This should be easily spotted and reported by the salon. They have to submit a record of credit card tips, and when the employees claims don't at least match that, the employee should get a visit from the IRS. Both are responsible for their share of payroll taxes on the tips, but the employee is the one responsible for his/her income tax.

The key word here is employee. In a extremely high percentage of salons and barber shops, the folks behind the chairs do not receive W-2 wages. Rather, they are 1099 contractors or subtenants of the owner (i.e., they lease a station from the owner). Another common arrangement is payment on commission for a percentage of the services; this is treated as ordinary income, for the stylist, who does receive a W-2. With contractors and leased stations, the shop must rely on the stylists to self-report their tips accurately, unless they have a pretty sophisticated (read: expensive) payment infrastructure because it does not have visibility to what these parties are reporting in real time. So, calling this issue "easy to spot" is not entirely accurate.

 

[HudsonHawk]

The key word here is employee. In a extremely high percentage of salons and barber shops, the folks behind the chairs do not receive W-2 wages. Rather, they are 1099 contractors or subtenants of the owner (i.e., they lease a station from the owner). Another common arrangement is payment on commission for a percentage of the services; this is treated as ordinary income, for the stylist, who does receive a W-2. With contractors and leased stations, the shop must rely on the stylists to self-report their tips accurately, unless they have a pretty sophisticated (read: expensive) payment infrastructure because it does not have visibility to what these parties are reporting in real time. So, calling this issue "easy to spot" is not entirely accurate.

I'm still not following you. Whether reported by the salon to the stylist on a W2 or a 1099, if the person receives compensation (credit card tips) from the salon, the salon will have a record of those and that amount is reported to the IRS. When the stylists files his/her tax return, if the amount they show on their 1040 doesn't match what's been reported by the salon, a red flag goes up and someone starts asking questions. At least that's how it works legally. I'm sure there are plenty of under the table operations out there.

 

[EliasRDA]

Bad Co, I'm gonna use your advice then so we'll agree to disagree. I was trained in Culinary Arts/running a bakery &/or restraurant in CT & RI, that was in the early 80's, so like you I have a few yrs in the business.

I've decided to not post what I really want to say so as to save the Bartenders here from extra work. Sides, it seems I'm not the only one who thinks you are using your "limited" experience, limited in that it applies to you only, whereas some of us have "limited" experience also but are disagreeing with you on your "facts".

Have a good nite, I'm gone so save the reply to me about what your "experience" is.

 

[Bad Co]

Enough said

 

[Edward]

Jinkies, some people get eadily bent out of shape. I believd this what ver kids refer to as "First World Problems". Though frankly, I often think most servers of any experience can smell trouble, and adopt the age old "this one's a whiner no matter what I do, so why waste the effort"approach. I'm not unsympathetic to that in many cases.

 

[dh66]

You nailed it Edward.

 

[HudsonHawk]

Jinkies, some people get eadily bent out of shape. I believd this what ver kids refer to as "First World Problems". Though frankly, I often think most servers of any experience can smell trouble, and adopt the age old "this one's a whiner no matter what I do, so why waste the effort"approach. I'm not unsympathetic to that in many cases.

Yeah, I'm not sure why...but I get the feeling some people are just hard to please...

 

[LizzieMaine]

Jinkies, some people get eadily bent out of shape. I believd this what ver kids refer to as "First World Problems". Though frankly, I often think most servers of any experience can smell trouble, and adopt the age old "this one's a whiner no matter what I do, so why waste the effort"approach. I'm not unsympathetic to that in many cases.

We have a word for patrons like that, which I won't share here. Suffice it to say there are plenty of people out there who are the black hole around which, evidently, the entire universe is expected to revolve. Once they start getting aggressive or obnoxious with my kids, that's when I step in and suggest they might find a place more to their liking on the sidewalk.

 

[Guttersnipe]

I'm still not following you. Whether reported by the salon to the stylist on a W2 or a 1099, if the person receives compensation (credit card tips) from the salon, the salon will have a record of those and that amount is reported to the IRS. When the stylists files his/her tax return, if the amount they show on their 1040 doesn't match what's been reported by the salon, a red flag goes up and someone starts asking questions. At least that's how it works legally. I'm sure there are plenty of under the table operations out there.

Here's a common scenario: Lots of salons have a mix of station lessors and commission-compensated staff. For simplicity, the salon has all the stylists fill out tickets that show the service performed and amount that should be charged. These tickets are brought the the front desk where payment is collected. The stylists, whether they are lessors or on commission, in turn keep a running tab of services and tips, which is turned into the front desk at the end of the day or week. For folks who get a W-2 or a 1099 (i.e., commission-compensated employees) it's a lot easier to notice un-reconciled totals when they do the payroll. However, if the salon does not have an integrated card processing system and accounting/billing system (for example, uses an unconnected credit card terminal or Square), disagreeing totals may not be noticed until the salon does periodic book keeping at the end of the month, quarter, or even the year . . .:eeek: (it happens!).

Mind you, none of this necessarily has to do with maleficence. Like waiters, stylists tip out a number of people (the receptionist, the shampoo girls, the apprentices, etc.). Stylists generally deduct the amount they tip out from their declared gratuities. However, since salons and barber shops generally have much more informal systems than restaurants, the amounts that are tipped out are almost never listed as a deduction and "get lost" in the shuffle.

Make sense?

 

[Bad Co]

Well Said

 

[HudsonHawk]

Here's a common scenario: Lots of salons have a mix of station lessors and commission-compensated staff. For simplicity, the salon has all the stylists fill out tickets that show the service performed and amount that should be charged. These tickets are brought the the front desk where payment is collected. The stylists, whether they are lessors or on commission, in turn keep a running tab of services and tips, which is turned into the front desk at the end of the day or week. For folks who get a W-2 or a 1099 (i.e., commission-compensated employees) it's a lot easier to notice un-reconciled totals when they do the payroll. However, if the salon does not have an integrated card processing system and accounting/billing system (for example, uses an unconnected credit card terminal or Square), disagreeing totals may not be noticed until the salon does periodic book keeping at the end of the month, quarter, or even the year . . .:eeek: (it happens!).

Mind you, none of this necessarily has to do with maleficence. Like waiters, stylists tip out a number of people (the receptionist, the shampoo girls, the apprentices, etc.). Stylists generally deduct the amount they tip out from their declared gratuities. However, since salons and barber shops generally have much more informal systems than restaurants, the amounts that are tipped out are almost never listed as a deduction and "get lost" in the shuffle.

Make sense?

Not really. The first situation you describe is simply the salon having a poor bookkeeping system. Of course that happens. The second situation is a service provider who has a poor record keeping system, in which they fail to account for their expenses. I'm sure that happens as well. Either mean that the stylist may steal from the salon, or mean that the stylist doesn't get to deduct their expenses, but neither situation shifts any tax liability from one entity to the other.

 

[Guttersnipe]

Not really. The first situation you describe is simply the salon having a poor bookkeeping system. Of course that happens. The second situation is a service provider who has a poor record keeping system, in which they fail to account for their expenses. I'm sure that happens as well. Either mean that the stylist may steal from the salon, or mean that the stylist doesn't get to deduct their expenses, but neither situation shifts any tax liability from one entity to the other.

It's very easy to pontificate about what small businesses should and should not do via a keyboard, but real world operations and bookkeeping aren't simple, easy or black and white. Personally, I'm inclined to be sympathetic towards taxpayers and give them the benefit of the doubt, as my living is derived from providing audit defense. However, if that's your view you are absolutely entitled to it!

 

[Guttersnipe]

...to get this thread back on topic, Wikipedia has a pretty concise history of tipping in America that cites two seemingly legitimate sources, Tipping: An American social history of gratuities and the article "The payment of gratuities by customers in the United States: An historical analysis" from International Journal of Management.

Apparently, conditions during Prohibition had a large influence on spreading the practice.

 

[HudsonHawk]

It's very easy to pontificate about what small businesses should and should not do via a keyboard, but real world operations and bookkeeping aren't simple, easy or black and white. Personally, I'm inclined to be sympathetic towards taxpayers and give them the benefit of the doubt, as my living is derived from providing audit defense. However, if that's your view you are absolutely entitled to it!

I'm not pontificating, I'm speaking from real world experience from a server and a tax accountant for restaurants. And likewise, you're entitled to your opinions, but your point still makes no sense, either in theory or in practice.

 

[Guttersnipe]

I'm not pontificating, I'm speaking from real world experience from a server and a tax accountant for restaurants. And likewise, you're entitled to your opinions, but your point still makes no sense, either in theory or in practice.

You know what's funny, I kinda guessed that you are public accountant from reading your posts! Compliance and consulting are very, very different worlds indeed.

 

[HudsonHawk]

You know what's funny, I kinda guessed that you are public accountant from reading your posts! Compliance and consulting are very, very different worlds indeed.

I'm not an accountant. My wife is. And I assume the compliance/consultant remark is some sort of an insult, but you still haven't explained your original point.

 

[V.C. Brunswick]

[video=youtube;x4LHLM4WIw0]https://www.youtube.com/watch?v=x4LHLM4WIw0[/video]

 

[scotrace]

This thread has been significantly edited. It always pays for new members to get a feel for the place before adding to the conversation, as The Fedora Lounge is not like many other forums, in that we require a certain degree of civility in discourse.

Usually we prefer to give out a warning, but in Springs1 case, we'll make an exception and go straight for the dues refund and escort out.