Tip Out Sheet: Free Template for Restaurants

By Nicole Hullihen, former SaaS Chief Operating Officer and Microsoft MVP · Updated October 25, 2026

At the end of every shift, restaurants need to answer the same question: how much of the night's tips goes to the bussers, bartenders and food runners who supported the servers? Without a clear tip out sheet, the answer changes from night to night, staff argue and the restaurant can end up breaking tip laws without realizing it.

This guide includes a free tip out sheet template, explains common tip out methods with examples, covers what federal law says about tip pools and tip credits and shows how to keep records.

Note: This is general information, not legal or tax advice. Tip laws vary by state, and some states don't allow tip credits or have their own tip pooling rules. Check your state labor department and talk to an employment attorney or payroll provider.

Tip Out vs. Tip Pool

Both are forms of tip sharing. The legal rules for who can participate apply either way.

Free Tip Out Sheet Template

In this example, the server tips out 2% of net sales to the bar, 1.5% to bussers and 1% to food runners.

Support Staff Distribution

Common Tip Out Methods

Pick one method, write it down and apply it the same way every shift. Changing methods from night to night causes confusion and distrust.

Example: Percentage of Sales

Example: Hours-Based Busser Pool

Example: Points System

If the pool is $440, each point is worth $40. The bartender receives $240, the barback $120 and the server assistant $80.

What Federal Law Says About Tips

The Department of Labor's Fact Sheet #15 explains the federal rules for tipped employees under the Fair Labor Standards Act:

• Tipped employees are those in occupations where they customarily and regularly receive more than $30 a month in tips.
• Tip credit: an employer must pay a tipped worker at least $2.13 per hour in direct wages under the FLSA, and tips must make up the rest of the minimum wage each workweek. Employers must meet notice and wage requirements to take a tip credit.
• Tip pools with a tip credit: an employer taking a tip credit may require tip sharing only with a pool limited to employees in occupations that customarily and regularly receive tips.
• Tip pools without a tip credit: an employer that pays a cash wage of at least the federal minimum wage may require a pool that includes non-tipped workers, such as cooks and dishwashers.
• Managers and supervisors may not receive tips from employees' pooled tips. They may keep only tips they receive directly from a customer for service they personally provide.
• Employers may never keep any portion of employees' tips, whether directly or through a tip pool, regardless of whether a tip credit is taken.
• Credit card fees: an employer may deduct its card processing fee from credit card tips, but not by more than the transactional fee. Some states prohibit this deduction entirely.

Many states have different minimum wages for tipped employees, and some don't allow a tip credit at all. Check your state rules before setting up a tip pool.

Who Can Be Included in Tip Outs

This table summarizes federal rules. State laws may be stricter. Ask an employment attorney about specific roles, especially working managers and shift leads.

Tip Reporting

The IRS says employees must report cash tips to the employer unless the total is less than $20 per month from that employer, and they must report them by the 10th day of the month after the month the tips were received. The IRS also says employers are required to withhold taxes on tip income, including the employee's share of Social Security and Medicare tax.

Your tip out sheet helps employees report accurately, since it shows each person's tips after tip outs. Work with your payroll provider on how tips are reported and withheld.

Recordkeeping

• Keep a completed tip out sheet for every shift.
• Have employees initial their amounts.
• Record the method used.
• Keep records of tip credit notices given to employees, if you take a tip credit.
• Keep payroll records showing tips and wages.
• Ask your payroll provider or attorney how long to keep tip records.

For payroll reports that show tips alongside hours, see Updoot's payroll report.

Writing a Tip Out Policy

Have an attorney review your policy, especially if you take a tip credit or include roles that aren't customarily tipped.

Cash vs. Payroll Tip Outs

Some restaurants pay tip outs in cash at the end of each shift; others run tips through payroll. Paying through payroll creates a clear record and can simplify tax reporting, but employees wait until payday. Whatever you choose, make sure the amounts match the tip out sheet and are reported correctly. See tips and commission tracking software.

Example: A Casual Restaurant

A restaurant let servers decide what to give bussers each night. Some gave generously, others gave almost nothing, and bussers quit often. The owner set a fixed tip out of 1.5% of net sales to bussers, divided by hours, recorded on a tip out sheet each shift. Busser turnover dropped, servers knew exactly what to expect and the arguments stopped.

Common Tip Out Mistakes

• Managers taking from the pool.
• Including cooks in a pool while taking a tip credit.
• The business keeping any part of tips, including for breakage or walkouts.
• Inconsistent methods from shift to shift.
• No written records.
• Deducting more than the card fee from card tips.

Tip Out Checklist

Typical Tip Out Ranges

There's no required tip out amount under federal law. Restaurants set their own, and common ranges vary by concept and market:

Survey your staff and look at what similar restaurants in your area do. The right tip out is one your team sees as fair and that keeps support staff motivated.

End-of-Shift Tip Out Process

1. Each server prints their sales report from the POS.
2. The manager confirms net sales and tips for each server.
3. Calculate tip outs using the posted method.
4. Record amounts on the tip out sheet.
5. Divide support staff tip outs by hours or points.
6. Each employee initials their amount.
7. Pay out cash tips or record amounts for payroll.
8. File the sheet with the shift paperwork.

Pair the tip out with the cash drawer count. See the cash drawer count sheet.

Spreadsheet Formulas for Tip Outs

Lock formula cells so they can't be changed by accident, and keep a copy of each night's sheet.

Handling Disputes About Tip Outs

• Post the tip out policy where everyone can see it.
• Show employees the calculation when they ask.
• Fix errors quickly and record the correction.
• Review the method if many employees feel it's unfair.

Transparency is the best way to prevent tip disputes.

Tip Outs for Banquets and Service Charges

Mandatory service charges, like an automatic 20% on large parties or banquet fees, are generally treated differently from tips. They may be considered the employer's revenue rather than tips, and different tax and wage rules can apply. Ask your payroll provider or attorney how to handle service charges and whether any of it is distributed to staff.

Tip Credit Notice

If you take a tip credit, Fact Sheet #15 says employers must meet notice requirements before claiming it. Work with your payroll provider or attorney to make sure the required information is given to tipped employees in advance, and keep a copy of what was provided.

Tip Outs When Employees Work Two Roles

Some employees work as a server one shift and a cook or manager the next. Track hours by role with your time clock so tip outs and wages are calculated correctly for each shift, and confirm with your attorney how dual roles are treated under federal and state rules.

Tip Out Quick Tips

• Pick one method and post it.
• Keep managers out of the pool.
• Never keep any part of tips.
• Record every shift.
• Check your state's rules.

Reviewing Your Tip Out System

Review your tip out method at least once a year or whenever your service model changes, such as adding food runners, switching to counter service or changing your wage structure. Ask staff for feedback, compare tip earnings by role and check that your method still follows current federal and state rules. Small adjustments can make a big difference in fairness and retention.

If you change the method, explain the change in writing before it takes effect, show an example calculation and give staff a chance to ask questions.

Getting Started This Week

1. Review federal and state tip rules.
2. Write a tip out policy and have it reviewed.
3. Print the tip out sheet.
4. Explain the method to staff.
5. Use the sheet every shift and file it.

Consistent tip outs build trust between servers and support staff, which helps the whole team.

Keep your completed tip out sheets organized by date with your other shift paperwork, so you can answer employee questions or provide records if they're ever requested.

A clear, documented tip out process protects your employees, your managers and your business, and it removes one of the most common sources of tension in a restaurant.

When in doubt about a specific role or situation, ask an employment attorney before the tip out is paid.

Track Hours and Tips With Updoot

Updoot's employee time clock records hours for hours-based tip pools, and the payroll report brings hours and tips together for your payroll provider.

Sources

• U.S. DOL: Fact Sheet #15, Tipped Employees Under the FLSA
• IRS: Tip Recordkeeping and Reporting

Frequently Asked Questions