Hi All, I have been reading this thread trying to see if the situation I have is addressed.

Currently small business has an outside POS feeding information into QBO, Net Sales and Tips.

The issue is there are no current employees and the owner would like to re-invest the tips.

How to make the Tip Payable into income for the business, similar to what it would be if it was W2 tip income to an employee?

TIA

Amy

I am having the same issue. I connected my POS system to QB . Everyday, I get a pay out amount including technicians' tips deposit into my business bank account. Some of the tips amount are pay out at the end of the day and some are pay out at payroll. In my Chart of Accounts, there is a Clover Tips category under Other Liabilities, it shows a big amount of Tips as my liability. How do I record tips to clear this? 

Thanks for joining the thread, Trang.

If you use QuickBooks Desktop Payroll, you'll have the option to report tips in and out on employee paychecks. 

To report tips to your employee's paycheck, you'll have to create two separate payroll item. For the purpose of tracking all the tips your employee received, create a payroll item for taxable tip amount. I'll show you how.

1. In QuickBooks Desktop, select Lists > Payroll Item List.
2. Click Payroll Item > New.
3. Choose Custom Set Up and select Next.
4. Choose Addition and select Next.
5. Name the item (for example, Tips In) and select Next.
6. Choose the Expense account and select Next.
7. In the Tax tracking type window, choose Reported Tips. Select Next > Next.
8. In the Calculate based on quantity window, choose Neither and select Next.
9. In the Limit Type window, hit Finish.

Following that, you can also create a payroll item for any tips the employee keeps. This is cash tips your employee received at the end of the day.

Here's how:

1. In QuickBooks Desktop, select Lists > Payroll Item List.
2. Click Payroll Item > New.
3. Choose Custom Set Up and select Next.
4. Choose Deduction and select Next.
5. Name the item (for example, Tips Out) and select Next.
6. Choose the Liability Account and select Next.
7. Note: You must choose the same account as the one entered in the Expense Account field of the addition payroll item for taxable tips).
8. In the Tax tracking type window, choose None. Select Next > Next.
9. In the Calculate based on quantity window, choose Neither and select Next.
10. Choose Net Pay and select Next.
11. In the Limit Type window, hit Finish.

These items can be added to employee paychecks under Other Payroll Items after you've set them up. Fill out each tips amount in the Rate column. Check out this article for more details: Report tips in and out on employee paychecks in QuickBooks Desktop Payroll.

You can always visit our website if you require additional helpful articles in the future: QuickBooks Help Articles page.

Let me know if you need further about the tips. I'll be around to help you.

Hi Giovani. Thank you for you quick response. 

It was very detail. However, my bookkeeper does the payroll using their QB. How can I approach this on my QB to offset the tips liability? 

Thank you,

Trang N. 

Hi Giovani. Thank you for your quick response. 

It was very detail. However, my bookkeeper does payroll using their QB. How can I approach it on my QB to offset the tips liability? 

I'll help you offset the liability, Trang.

I'd recommend adding an expense account when creating the payroll item to offset the tips. If you haven't added it yet, please see the steps below:

1. Go to the Company menu and then Chart of accounts.
2. Click the Account drop-down menu, then click New.
3. Add the details of the account.
4. Once done, click on Save & close.

Once done, assign the expense account to your payroll item. Here's how:

1. Go to Lists and then select Payroll Item List.
2. Click Payroll Item, then New.
3. Choose Custom Set Up and select Next.
4. Choose Addition and select Next.
5. Name the item (for example, Tips In) and select Next.
6. Choose the Expense account and select Next.
7. In the Tax tracking type window, choose Reported Tips
8. Click Next.
9. In the Calculate based on quantity window, choose Neither and select Next.
10. In the Limit Type window, click Finish.

Additionally, I've added an article that'll help you keep track of employee and payroll expenses: Run Reports.

I'm only a post away if you need more help running and managing payroll in QuickBooks. It's always my pleasure to help you out.

Hi ChareleneMae,

Thank you for you help. I currently don't have QB Payroll. I'm using our bookkeeper's payroll. How can I approach it on my end to offset this? 

Moving forward, I'll probably purchase my own QB Payroll next year. 

Thanks,

Trang N.

It depends how you are paying the tips out. Are you paying the employees out daily or on their check?