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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

5 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!

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