What is the definition of service fee?

Noun. 1. service fee - a percentage of a bill (as at a hotel or restaurant) added in payment for service. service charge. charge - the price charged for some article or service; "the admission charge". corkage - a charge added at a restaurant for every bottle of wine served that was not bought on the premises.

What does the service fee cover?

“The service charge helps cover the costs of doing business: office staff, utilities, office supplies, day to day operations, etc. So while a catering contract may show a break down of the event elements and their costs, the service charge helps cover the cost of the hours needed to prep and plan the event.”

What are the service fees?

A service fee is a monetary charge added to a customer’s bill or account for a service that has been provided by a business. There are numerous types of such fees that vary by industry. The most common fees for consumers include bank fees, credit card fees, and service fees from other utility providers.

Is a service fee taxable?

Since service charges are categorized as regular wages for tax calculation purposes, employers are required to deduct payroll taxes before distributing to employees. Conversely, withholding is not required in advance when distributing tipped wages. Tip and service charges can complicate payroll taxes.