I would like the online payroll system to deduct the tip income from sales, so that the net income is accurate for sales tax reporting purposes

Hi there, mnschweitz,

I'll be happy to share the details on how you can records tips on your sales without affecting your sales tax.

You can enable the Tip (Gratuity) option in your sales settings, and you'll see a field when you can enter the tip amount on your sales receipt. This is won't be included in your sales tax calculation. Please refer to this article: Share tips with your team.

If you need clarifications or if you have other questions, please don't hesitate to reach back out.

Actually I need them to affect sales.

Most of our sales are auto deposited in the bank and downloaded to our income account in online QuickBooks.  The deposits include sales and paycheck tips lumped together.

Paycheck tips are disbursed thru QB online  payroll on a biweekly basis.
I would like those tips to post in ‘Less Paycheck Tips’, a sub account to dining room Sales.  Then total sales will equal taxable sales.  And life will be simple.

mike

Hello there, mnschweitz.

Let me share details on how you can assign the Less Paycheck Tips expense account on your employee's paychecks. This way, you'll be able to keep your accounts accurate and pay your employees the right tip amount.

In QuickBooks, deducting the tip income from your sales account isn't an option. However, you can select which expense account you're going to use for your Paycheck Tips in the Accounting Preferences window. Please note that there'll be no sales income account that'll be connected to your employee's tips.

1. Go to the Gear icon.
2. Select Payroll Settings.
3. Under Preferences, click Accounting.
4. In the Wage Expense Accounts section, select the I use different accounts for different wages option.
5. In the Paycheck Tips section, select the account you want to use.
6. Select OK.

To learn more about recording tips in QuickBooks Online (QBO), kindly refer to this article for the step-by-step process: Tracking Tips in QBO. It also contains information about adding tips before depositing the final total payment amount to your employee's bank accounts. 

Please let me know if you have other concerns. I'm just around to help.

having the paycheck tips post to expense is false, as it is not considered as income nor should it be a company expense.  When it is collected and deposited into our bank accounts, it becomes a liability owed to employees.

If Quickbooks refuses to allow legal accounting of this thru the payroll, then we must enter a journal entry from Paycheck Tips (expense account) to our income account, after we run biweekly payroll.

If we were accurately reporting on a daily basis, then we would be splitting the bank deposits between our income account, and liability accounts for sales tax and paycheck tips.  that would require the payroll system to post a balancing entry to paycheck tips liability account.