Credit Card tips paid in cash daily prior to payroll. Cash account paid from was cash sales. How does this appear in the profit and loss?

Tips show up on the report depending on how it is entered. I'm here to guide you on how this work in QuickBooks, amber.

Cash tips are those your employees receive directly from customers in cash, not through a paycheck. Thus, tips given through credit card charges converted to cash are considered Cash tips. This means that the amount won't show up on any financial report as the business didn't get any hold of the tips as it is directly given to the employees by their customers.

However, if the employer is getting the tip first and then gives it back to the employee through payroll, you'll have to set it up as Paycheck Tips. It will show on the Profit and Loss under their Wages Account, but won't be able to determine it as Paycheck Tips. 

Furthermore, you can access some of our payroll reports if you want to take a closer look at your business and employees. Go through this article for your guide: Run payroll Reports.

Please get back to us if you have any questions about tips or payroll. We'll always be right here to help you.

I’m trying to get an accurate P&L from last year. Paychecks have already been DD and W3 submitted to IRS. What if I didn’t use the Cash Tips feature when paying out the portion of credit card tips they were paid in cash? Instead I put the full amount of reported credit card tips in as Paycheck Tips and then deducted the amount already received in cash as “Retained Tips”. So they didn’t get that money twice. My questions are: Are the “Retained Tips” (which 100% equal cash sales) on the P&L recorded as a payroll expense or asset? If I had used the “Cash Tips” feature, what default account does Quickbooks use to deduct and track them for the BS and P&L? Is it an asset or liability? 

I’m trying to get an accurate P&L from last year. Paychecks have already been DD and W3 submitted to IRS. What if I didn’t use the Cash Tips feature when paying out the portion of credit card tips they were paid in cash? Instead I put the full amount of reported credit card tips in as Paycheck Tips and then deducted the amount already received in cash as “Retained Tips”. So they didn’t get that money twice. My questions are: Are the “Retained Tips” (which 100% equal cash sales) on the P&L recorded as a payroll expense or asset? If I had used the “Cash Tips” feature, what default account does Quickbooks use to deduct from paycheck and track them for the BS and P&L? Is it an asset or liability? Right now it appears I have inflated payroll expenses and only gross payroll is used on the P&L as an expense. 

I understand you pay your tips through cash, @AMBER. I can show you how to view the posting transaction for cash tips in QuickBooks Online.

We can view the Journal Report to check where the posting account for the tips is. Ideally, it's a credit to asset and a debit to expense. Please follow the steps below:

1. On the left pane, go to the Reports menu.
2. Search for the Journal report in the search bar.
3. Select Customize, then set the desired reporting date from the Report period.
4. Under Filter, choose Journal Entry from the Transaction Type drop-down menu.
5. Click Run report.
6. Under the MEMO/DESCRIPTION column, you can view all the notes and annotations you added to the journal entry.

We also have the option to customize the reports. Refer to this article for your guide:  Customize reports in QuickBooks Online.

Moreover, it would be better to contact your accountant for further guidance on the posting accounts for these transactions. They are a well and knowledgeable person to handle this kind of transaction. If you need to be associated with them, check out this article: ProAdvisor Program.

Please let me know if you have other concerns. I'll ensure you get the information you want. Have a great day.