A single floral arrangement can pass through many hands: from the designer who arranges it, the assistant who rings it up, the owner who checks the final look and the driver who delivers it. Every staff member plays their part to bring lovely arrangements to customers’ doorsteps. How then should tips be shared among floral staff?
As a floral shop owner, you may struggle to fairly share tips. This is especially true because normal operations have changed during COVID. You may have different hours, staff members and floral needs than before. These days, contactless delivery also goes faster than previous person-to-person delivery.
In addition, loyal customers are showing their support of small businesses by tipping higher amounts during the pandemic. This is a wonderful gesture, but also complicates the usual tipping arrangements.
With all these new factors, it’s a good idea to rethink how to share tips with your staff. Let’s go over the best ways to share tips and some key considerations to keep in mind.
The best ways to share tips
In the past, the driver typically took home the most tips from delivery. And this made sense: a floral driver typically owned his/her car and had to pay for gas. Nowadays, however, it might be fairer to divide tips differently, especially when your driver is earning more than your designers. You might rethink tip sharing so that your staff – including drivers, assistants and designers – equally share this extra income.
Share tips equally among staff members (including owner).
“It takes the whole team to run efficiently, so they should all reap the benefits.” -Floral shop owner
One way to share tips is to divide them equally among staff members. The floral shop owner can even be included, as long as he/she is an employee too. If your staff members work about the same amount of hours, this arrangement works well. This is especially true for small businesses with a handful of employees who are all invested in the business’ success.
Share tips based on the percentage of time worked.
“I split the tips amongst all the staff members excluding me, the owner. I created a formula based on how many days each staff member works and that’s how much they share in the tip total each month.” -Floral shop owner
Another way to share tips is to calculate the percentage of time worked for each staff member. If you have some employees who work full-time and some part-time, this is a fair way to split tips. For example, if a staff member works 20% of all the floral shop’s hours, for example, he/she will receive 20% of the tips earned.
Share tips equally but distribute as a bonus.
“We decided as a group for me to hold onto the tips, divide equally among them, then distribute in December.” -Floral shop owner
Your staff members may also be interested in receiving tips once a year as a bonus. You might consider asking how your staff wants to receive tips. You can withhold tips and pay out in December during the holiday season, for example.
Key considerations for tip sharing
However you decide to share tips, you should be aware of some key considerations. You must make sure to follow all labor and tax laws regarding tips, which require some prior organization. You should also talk to all your staff members, so that they understand how tips will be shared.
#1. Give your driver a gas stipend.
If you decide to share tips equally among staff members, you should consider giving your driver a gas stipend. Your driver may be used to receiving all delivery tips and offering a gas stipend can help with these costs. Giving your driver his/her fair due with a gas stipend shows your support, while also being fair to your other staff members.
#2. Ensure you’re following all applicable labor laws.
Depending on the state of your business, it’s important to check the labor laws. Some states restrict tip sharing with the business owner, if there are other staff. However, if you’re the business owner and an employee, you won’t need to worry about this limitation. In any case, you should check with your business lawyer to ensure that you’re correctly managing tips within the law.
#3. Check with your accountant about how to report and tax tips.
Whenever you collect tips, it’s essential that you report them as income. As you go to share tips with your staff, you should check with your accountant about how they should be handled. Depending on your business status, the tips your floral shop receives may be categorized differently. You’ll also have to pay tax on tips as well. Your accountant will know best.
Ultimately, sharing tips with your staff is the perfect way to show your appreciation and motivate them to do their best work. These days, 65% of floral arrangement orders receive tips, so it’s important to clarify how they’ll be shared among your staff.