How to handle credit card tips

Bog29 · ‎January 20, 2023

Hi there,

I am using QBO to do the bookkeeping for our bakery. Our POS system is Square, and at the end of the day Square deposits the day's earnings (including tips) into our bank account. QBO pulls this information and correctly tracks the deposit, and correctly creates an entry in a "Tips" liability account to track tips that have been collected but not yet paid out.

At the end of the month, we pay our employees using QBO Payroll for their regular wages + controlled tips, either via cheque or etransfer. The problem is that QBO does not then update the Tips liability account with the controlled tips that were paid out on the paycheques. I am hoping someone has come across this issue and can help me sort it out.

Thank you in advance.

Henock K · ‎January 20, 2023

Hi Bog29,

Welcome to the Community. It's important to correctly record your transactions to keep your books up to date. QuickBooks Desktop is a flexible program that simplifies the way you manage your books. I'd be glad to provide you with information on the possibility of handling credit card tips.

At this moment, the program does not offer the ability to choose the payroll account for controlled tips. I encourage you to manually update your tip liability account using a journal entry.

If you're unsure of which accounts to use for journal entry, I recommend contacting an accountant for the best course of action. If you don't have an accountant, you can find one near your area by clicking on the My accountant tab on the left navigation menu > Find a pro to help.

If you wish to include the option to link the tip liability account with payroll, I encourage you to send us Feedback under the Gear icon at the top. This is sent to our team developer to be considered for future updates.

Let me know if you have any questions, I'll be happy to help.

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