Record an invoice overpayment as a tip in QuickBooks Online

Learn how to turn a customer overpayment or credit into a tip in QuickBooks Online.

When a customer overpays an invoice to give you a tip, you need to record the income. Here’s how.

Step 1: Add an income account to track tips

1. Go to Settings ⚙ and select Chart of accounts.
2. Select New.
3. For Account Type, select Other Income.
4. For Detail Type, select Income.
5. Enter a Name, like "Tip Revenue" and select Save and Close.

Step 2: Create a tip item

1. Go to Settings ⚙, then select Products & services (Take me there).
2. Select New, then Non-inventory.
3. Enter a Name, like "Tips."
4. For Income account, select the account you created in Step 1.
5. Select Save and close.

Step 3: Record the extra money as a tip

1. Go to Sales and select Invoices (Take me there).
2. Select Create invoice.
3. Enter the Customer. In the Products/Services field, select the tip item you created in step 2.
4. Select Save. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
5. Select the credit and then Save and close.

Provincial laws vary on unclaimed funds. If your customer paid you too much in error, you should contact them and arrange for a refund.