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Jeffrey7
Level 2

How to handle employee tips received via customer credit cards

I am confused on how to handle the following:

 

Customers come into my store and make a purchase. In addition to their purchase, they include a tip for the employees that is included in the credit card transaction. How do I account for this in Quickbooks? 

Solved
Best answer January 05, 2021

Best Answers
BigRedConsulting
Community Champion

How to handle employee tips received via customer credit cards

The tip money belongs to the employees and so is a liability to you until you add it to their next payroll.

 

In this case,

- Set up one or more other charge items that use a liability account set up just to track the tips.  You may want to set up a different tips item for each tipped employee. This will help you create item-based reports later to determine the tips to pay.

- Then use the item(s) on sales for the tip amount.

- Then create an item-based report for the appropriate period (to capture previously un-reimbursed tips.) If you created an item per employee, that detail will show on the report.

- Create a Tips addition payroll item for these credit card based tips. Use the same liability account on the payroll item that you used on the sames item.

- Then use a Tips addition item to add the appropriate tips to the employee paychecks.

- After recording the paychecks, the liability account's balance will be reduced by the amount of tips on the payroll.  Use the payroll summary report or a custom report to verify that the CC tips paid are the same as the CC tips collected from the sales report.

View solution in original post

9 Comments
BigRedConsulting
Community Champion

How to handle employee tips received via customer credit cards

The tip money belongs to the employees and so is a liability to you until you add it to their next payroll.

 

In this case,

- Set up one or more other charge items that use a liability account set up just to track the tips.  You may want to set up a different tips item for each tipped employee. This will help you create item-based reports later to determine the tips to pay.

- Then use the item(s) on sales for the tip amount.

- Then create an item-based report for the appropriate period (to capture previously un-reimbursed tips.) If you created an item per employee, that detail will show on the report.

- Create a Tips addition payroll item for these credit card based tips. Use the same liability account on the payroll item that you used on the sames item.

- Then use a Tips addition item to add the appropriate tips to the employee paychecks.

- After recording the paychecks, the liability account's balance will be reduced by the amount of tips on the payroll.  Use the payroll summary report or a custom report to verify that the CC tips paid are the same as the CC tips collected from the sales report.

View solution in original post

Jeffrey7
Level 2

How to handle employee tips received via customer credit cards

Did I do this correctly?

 

Screenshot (2).png

BigRedConsulting
Community Champion

How to handle employee tips received via customer credit cards

Looks OK...

Jeffrey7
Level 2

How to handle employee tips received via customer credit cards

I would like to call you so that you can help me with an issue that I am having with Quickbooks. It would take too long to describe it by typing it out.  I would also like to be able to call you in the future if I have any issues with Quickbooks and the associated accounting. Can we arrange that? You seem like an expert on the subject matter. I am willing to pay what ever the associated fees are for the consulting.

Jen_D
Moderator

How to handle employee tips received via customer credit cards

Hi there, @Jeffrey7,

 

If you wish to work with one of our contributors in the community, you can direct message or mention them here. I'm glad you found someone who's of great help with your concern.

 

Please know that you can still share some of your concerns here and we will be more than happy to help you with it.

 

I'll be waiting for your response if I can be of any help. Have a nice day!

userjsamotta3
Level 1

How to handle employee tips received via customer credit cards

I have set up the employee to include the payroll tips feature.  How do I setup a liability account to be able to offset the tips that are being received via credit card deposits from an outside vendor.  Currently, I added an expense account under wages to keep track but I know that is incorrect.  Thanks for any assistance on this.  I am fairly new in this industry and with QuickBooks Online.  However, I have worked on the Desktop version for over 25 years.

MaryJoyD
QuickBooks Team

How to handle employee tips received via customer credit cards

I can help you set up this liability account in QuickBooks Online (QBO), @userjsamotta3.

 

You can go to the  Chart of Accounts page to set up this liability account. I also suggest consulting an accountant for a recommendation on the specific accounts to use to track the transaction.

 

Follow the steps below:

 

  1. Go to the Accounting menu on the left panel to choose Chart of Accounts.
  2. Click the New button in the upper right to open the Account window.
  3. Choose the Account Type drop-down and pick Other Current Liabilities or Long Term Liabilities.
  4. Select the appropriate category in the Detail Type drop-down.
  5. Enter a name for the account.
  6. Click Save and close.

 

Check this article for more information on how to set up your liability account in QuickBooks Online: Set up a loan in QuickBooks Online.

 

Let me share this article for additional information with adding accounts in your Chart of Accounts: Add an account to your chart of accounts in QuickBooks Online.

 

Stay in touch if you have any other concerns or additional questions about the account. I’ll be glad to help and answer them for you. Enjoy the rest of the day.

userjsamotta3
Level 1

How to handle employee tips received via customer credit cards

Hi MaryJoy,

I have already setup the liability account.  How do I have the Payroll Item for Tips that is on the paystub go to the same GL Liability Account to offset the amount and reconcile that the tips have been paid?

 

Candice C
QuickBooks Team

How to handle employee tips received via customer credit cards

Good afternoon, @userjsamotta3

 

Thanks for reaching back out to the Community. Allow me to give you some insight into this issue. 

 

If you use QuickBooks Online Payroll, there will be a default account tied to the default item. This means you won't be able to change it. However, here are the steps on how to include the type of tip on your employee's profile. Here's how: 

 

  1. Go to the Payroll tab on the left-hand menu bar. 
  2. Choose the Employees portion of the page. 
  3. Click the Edit (Pencil) icon next to Pay in the "employee details." 
  4. Put a check beside Paycheck Tip from the "How much do you pay" section. 
  5. Hit Done

 

For further details, check out this link: Employee Tips

 

I'm always around if you have any other questions about QuickBooks. Just leave a reply below, and I'll get back to you.

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