Payments
Tip pools and cash tips: a practical guide for shops
A tip pool shares a location’s tips across the team by a rule you set in advance. Cash tips need a record, because a tip nobody writes down is one nobody can prove. This guide covers how each split works, how to record cash honestly, and what you have to decide under your own state’s rules.
When a pool fits and when it does not
A pool fits where the work is shared. In a restaurant, the server who takes the order, the person who runs the food and the one who clears the table all shape the tip. At a salon, the front desk and the shampoo assistant may never touch a client’s card but help the stylist earn the tip.
It fits poorly where each person works alone with their own regulars. A barber whose clients ask for them by name usually keeps their own tips, and a pool would move money from the person who earned it to people who did not. Many shops use both: individual tips for chairs, a pool for support roles.
Whichever you pick, pick it before the period starts and tell the team. People accept a rule they heard first more easily than one they discover on payday.
Three ways to split a pool
By hours worked is the most common. Each person’s share is the pool times their hours over everyone’s hours. It rewards time on the floor and needs a trusted record of hours.
An equal split gives the same amount to everyone who worked. It is the simplest to explain and the easiest to run, and it treats a four-hour shift like a ten-hour one.
Points let you weight roles. A lead might carry two points and an assistant one. It fits shops where roles clearly differ, and it needs an agreed list of who holds how many.
Try the numbers
Enter a pool and each person’s hours below. The chart under the sliders shows the same pool shared three ways for comparison.
- By hours
- Equal
- By points
Hover or tab to a column for the numbers.
| By hours | Equal | By points | |
|---|---|---|---|
| Avery | $533 | $400 | $600 |
| Blake | $400 | $400 | $400 |
| Casey | $267 | $400 | $200 |
Example: Avery 40 hours, Blake 30, Casey 20; points of 3, 2 and 1. Whole dollars.
Split a tip pool by hours worked
Enter the pool and each person’s hours. The shares follow the hours.
- Avery
- $533 40 h
- Blake
- $400 30 h
- Casey
- $267 20 h
- Avery
- Blake
- Casey
Hover or tab to a slice.
| Share | |
|---|---|
| Avery | $533 |
| Blake | $400 |
| Casey | $267 |
Example names and numbers. Pooling rules differ by state and by who counts as eligible.
Rounded to whole dollars. Tip-pool eligibility is a legal question: check your state before you set the rule.
Recording cash tips honestly
Cash tips are the weak point of any tip system, because nothing records them for you. The honest approach is boring: the person who is handed the cash writes it down at the end of the shift, the same day, in one place.
Do three things. Record each cash tip on the day. Keep the recording in the same place as the card tips, so nobody reconciles two lists. And make corrections visible: a mistake is fixed with a note, not erased.
The table shows who can do what in NextUp Walk-in. Notice that a team member can only reach back a week for their own, and can take one back for a day after recording it. That keeps the habit current and the record clean.
What the shop decides under its own state’s rules
Tip rules are set by federal and state law, and they differ. Many places limit who may share in a pool of employees’ tips, and owners and managers are commonly excluded. Some states handle tip credits, minimum wage and reporting differently. This post cannot tell you what applies to you.
What it can do is list the decisions you have to make and write down. Check each against your state labor department and the US Department of Labor, or ask an employment attorney, before you set the rule.
Who can do what with a cash tip
| Record a cash tip | Their own, for the last 7 days | Anyone’s, with a note, up to 400 days back |
|---|---|---|
| Take one back | Their own, within 24 hours of recording | Any entry |
| See cash tips | Their own | Everyone’s |
| Where it shows | On their book and statement | On statements and the payroll file |
How cash tips work in NextUp Walk-in. Every change is in the activity log.
How NextUp Walk-in handles it
A tip pool is set per location. You choose the split (by hours from the time clock, equally, or by points) and how long a period runs: weekly, every two weeks, twice a month or monthly. Pools are for staff only; owners and managers are not in them.
When a period ends, the owner reviews the shares and can leave someone out. Each share then goes on the person’s statement, to be paid through payroll or marked paid. Tips refunded in full, or lost to a dispute, are not shared.
Cash tips are recorded by the person on their own book, or added by an owner or manager with a note. They carry into the statement and the payroll file with the card tips, on every plan. For card tips, you choose whether Stripe’s fee comes off the tip or the business covers it. NextUp Walk-in takes no fee on tips.
Statements show every step from what customers paid to what is owed, and each person can read their own. NextUp Walk-in does not pay the pool out; your business pays its team. Tip pools are part of Pro and the 14-day trial has them. See commissions and tip pools, tips and team pay, the time clock, restaurants, hair salons, pricing.
Decisions to write down before you pool tips
| Who is in the pool | Wage rules in many places limit who may share in employees’ tips | Staff only. Owners and managers are not in pools. The owner can leave a person out of a period. |
|---|---|---|
| How shares are split | Hours, equal and points treat part-timers differently | By hours from the time clock, equally, or by points |
| How long a period runs | A shorter period shows people their share sooner | Weekly, every two weeks, twice a month or monthly |
| Who covers the card fee on a tip | It changes what each person receives | You choose: it comes off the tip, or the business covers it |
| What happens to a refunded tip | A tip given back is not the team’s to share | Tips refunded in full or lost to a dispute are not shared |
| How cash tips are recorded | A tip nobody records cannot be shown later | The person records their own; an owner or manager can add with a note |
| Whether the team is told in writing | People accept a rule they heard before the period began | Each person reads their own share on their statement |
| Tip credits and tax treatment | They depend on your state and your payroll provider | Not calculated by NextUp Walk-in; that stays with your payroll provider and your business |
Not legal advice. Rules differ by state; check yours.
Make tips a written rule
Questions
Can an owner or manager be in a tip pool?
In NextUp Walk-in, pools are for staff and owners and managers are not in them. Whether the law lets an owner or manager share in a pool is a question for your state labor department.
How do I record cash tips?
Each person records their own on their book for the last 7 days, or an owner or manager adds them with a note. They carry into the statement with card tips, on every plan.
Does NextUp Walk-in pay out the tip pool?
No. It works out each share and puts it on the statement. Your business pays its team and marks the statement paid.
Which plans have tip pools?
Tip pools are on Pro and the Restaurant plan, and the 14-day trial includes them. Cash tips and team pay statements are on every plan.