THESE CAN LEAD TO BIG TROUBLE
ILLEGAL GAMBLING
TRAINER
There may be a problem any time the house gets a piece of the proceeds. Consider having Lottery Commission rep. at a VP clinic.
Contact local law enforcement, DA with any questions. They probably already know more about you than you think they do!
BEING OPEN TO THE PUBLIC
Watch out for public accommodation rules.
Never “open to the public”; “Members and Guests are invited”.
YOUR LODGE WORKERS
1. Unpaid volunteers
• Can be Members or Non-members • Free food and beverage
- Sales/Use taxable at cost - IRS compensation could apply
- Transfer from Cost of Sales to Lodge or Club Volunteer Expense 2. Casual labor
• Non-consistent / Temporary help (works once or twice a year depending on events) • Regular part time (office, maintenance, janitor, prep cook, bartender, dishwasher..) • Regular bartenders and wait staff
3. Independent contractors
A. A general rule is “that you, the payer, have the right to control or direct only the result of the work done by an independent contractor and not the means and methods of accomplishing the result.”
• State licensed businesses with IRS federal ID numbers not requiring 1099 forms
• Those requiring 1099 forms, which are contractor version of W-2 forms - you must have a W-9 form on file, i.e. bands, and if not, 28% must be withheld
B. Generally, you must report payments to independent contractors on Form 1099-MISC if the following four conditions are met:
• You made the payment to someone who is not your employee
• You made the payment for services in the course of your trade or business • You made the payment to an individual, partnership, estate or, in some cases, a
corporation
• You made payments to the payee of at least $600 during the year - IRS penalties apply to each form not filed
4. Violations of tax laws • Payroll taxes
• Federal, State, County and Local taxes and licenses • Texas Sales and Use taxes
Suggestion: Use a payroll service (such as ADP) if possible. This will avoid BIG headaches for a small fee.
TIPPED EMPLOYEES FEDERAL LAW
• Tipped employees are those who customarily and regularly receive more than $30 a month in tips (IRS publication 15, circular e)
• The employer may consider tips as part of wages, but the employer must pay at least $2.13 an hour in direct wages.
• Employees must retain all of their tips, except to the extent that they participate in a valid pooling or sharing arrangement.
• If less than 10 employees, reporting is not required, but payroll taxes apply.
EMPLOYEE RECORDS
Maintain the following on each employee: • Full name and social security • Address with ZIP Code • Employment hours • Pay basis
• Payroll history
• Date of payments and amounts
• Date hired and terminated, if applicable
• Also suggested: disciplinary action documentation • Payroll tax state and federal tax
• Deduction forms, i.e. W-4, state income tax
EMPLOYEE DISHONESTY
Regardless of your choice of the three major statutory provisions for managing Club operations, it is suggested:
• Read the Book!!!
- Grand Lodge statutes
- Grand Lodge Accounting-Auditing Manuals
LEARN ABOUT CONTROLS! – “Trust, but Verify”
Having proper checks & balances is everyone's responsibility. - Use the checklists!
- If you don't, you can end up like several Lodges over the past few years that lost $$ and their Lodge.
• Past members and/or employees have been in jail and/or on probation for embezzling $$
SECURITY
How many people have a key to your personal residence? • Limited access to authorized personnel only
• Knock down boxes – locked box at the Lodge with keys to office, liquor cabinet, etc. • Losses, not reimbursed by your insurance company, affect bottom line results
INVENTORY RECORDS
What to order, when to order, and when not to order (slow moving goods).
Par levels – Every item in your inventory should have a par level. This is the reorder point for an
item, the minimum on-hand inventory of an item needed between a reorder point and the time the order arrives.
Example: The bar goes through two bottles of vodka per day. It take two days to receive a
liquor order. Par level of vodka is four bottles. (2 bottles x 2 days = 4 bottles)
Requirements:
• Accuracy of your month end physical inventory • Basis of reference - what to order
• Turnover data - what's selling and not
• What brands to carry in inventory, especially if you change House Committee Chair each year?
o Well - o Call - o Premium -
o Super Premium -
• Compare month end physical inventory to perpetuals and follow up on differences before inventory get out of hand and become very costly.
• DO NOT reorder white elephants
Perpetuals are items that will be reordered once inventory gets low.
White Elephants are items that NEVER seem to rotate out of inventory. Perpetuals can be
special orders, fad liquors, or simply slow moving (schnapps). Identify these items and make sure EVERYONE who can reorder liquor DOES NOT reorder these items.
ARE THERE ESTABLISHED BAR POLICIES AND ARE THEY ENFORCED?
• Spillage – MUST be recorded on bar shift sheet
- Over pouring - If members notices, should report to House Committee. Chairman MUST follow-up and make reprimands
• Theft -
- Unauthorized free drinks – Who has the authority at the Lodge to give comp drinks? - Pour premium liquor and charge for well
- not ringing up sales
- Under ringing drink orders – 4 drinks ordered, only 3 are rung up.
Management tool
On monthly budget divide cost by revenue.
- Example – Liquor purchased during month = $800 Liquor Sales for the month = $3809 Liquor Cost (Percentage) is 21% Typical bar costs (percentages)
- Liquor – 21% - Beer – 40% - Wine – 40%
- By Statute total cost should not exceed 35%. Theft Prevention:
- Keep register draw closed between sales - Ring up all sales at purchase
§ Record sales upon purchase - Watch for No Sales
- Count methods – dimes, tooth picks, bottle caps, folded bills in register…
- Limit size of bags a bartender can bring into bar area. Bringing in liquor to refill bar liquor can hide theft by throwing off cost percentages.
- Cash overage
§ Indicates not all drinks being rung up - Never over or short
§ Indicates a potential problem
- Limit bartenders access to Y and Z tape access
- Require bartenders to turn in an empty bottle in replacement for a full bottle - Measure/weigh liquor bottles and count beer bottles before and after shift.
CASH REGISTER - Y AND Z TAPES
Ideal procedure: "Y" & "Z" tape for optimum control
• Bartender, who handles cash and inventory, should not handle either tape.
• They should count their money, prepare their next bank, If required, prepare the daily report and place everything into a bag for placement into the drop safe or other protected
receptacle.
• House Committee representative:
- Obtains the "Y" tape and balance cash to it - Prepares bar banks, if required
- Reviews cash over and short
- Prepares daily report to record transaction data and to balance cash prior to deposit. - Attaches all receipts for miscellaneous supplies purchased out of cash register monies. • "z" tape run out by Lodge Secretary and/or Treasurer for balancing as above.
• The House Committee should keep a daily record of bar and food sales and miscellaneous disbursements, cash over and short, by employee, and cash turned in to the Secretary for audit to figures reported on month end financial reports.
• This is an example as operating conditions vary considerably between lodges. These types of controls or alternate controls should be implemented and maintained to fit the needs of your particular lodge operating conditions.
• A general rule to follow is the register tapes and cash should flow in different administrative channels. If not an acceptable alternate procedure is required to properly safeguard the cash and inventory assets of the Lodge on a consistent and continuous basis.
EMPLOYEE DISCIPLINE
• Two notices on file signed by House Committee Manager and witness • Third time - Management problem
IMPORTANT CASH HANDLING CONTROLS
• All Club money is Lodge money and must be turned over to the Secretary. This is not a custom. This is in the Statutes (12.050-E).
• The Secretary should give a receipt to the House Committee Chairman for all monies received, although not currently in the Statutes, as a matter of good Business Practices. • Money should be deposited on a timely basis – The less $$ on hand the less temptation.
IMPORTANT FOOD SERVICE CONTROLS
§ What should your food cost be? Grand Lodge says 35% § What is your ACTUAL food cost? Why?
§ Real estate is Location, Location, and Location. Food Service is Yield, Yield, and Yield. § Pre-number waiter slips that can be audit to Cash Register Tapes to Cash Receipts to
Bank Deposits. Missing slips = missing money.
§ Who has access to the kitchen, pantries, refrigerators, freezers?