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T
thebookkeepingmama
November 16, 2021
Question

Payroll Tips

  • November 16, 2021
  • 1 reply
  • 16 views

The tips that our customers leave when they pay with their credit cards are booked to the Tips Liability account when our daily sales from Square come through.  I pay out these tips in the employees' paychecks using 'Paycheck Tips', but they are being booked to the wages expense account.  How do I get the tips paid to employees to be booked to the liability account when I run payroll?

    1 reply

    JenoP
    JenoPQuickBooks Team
    QuickBooks Team
    November 16, 2021

    Let me help you change the account mapping for the payroll tips, thebookkeepingmam.

     

    You can go to the Payroll Settings and change the details so the tips are booked to a different account. Here's how: 

     

    1. Go back to the Gear icon and select Payroll Settings.
    2. Look for Preferences and click on it, then select Accounting Preferences.
    3. Go to the Wage Expense Accounts section, then click the drop-down list for the tips, and then select the liability account that you want.
    4. Click OK. 

     

    Allow me to give you more articles and references for additional guidance when running payroll in QBO: 

     

     

    Reply to me or visit us again if you have further queries. We're always here to help you any time of the day.

    T
    thebookkeepingmamaAuthor
    November 16, 2021

    Thank you for your suggestion, however the instructions you gave are incorrect and your solution did not work.  I had to go to Gear -> Payroll Settings -> Accounting -> Wage Expenses -> Paycheck Tips in order to access what account Paycheck Tips is booked to.  When I click on the drop down menu to change that account, the only options I have are expense accounts.  The liability account that the tip amount is booked to through the Square syncing app is not listed.  How do I fix this?

    ~Kim

    M
    MirriamMQuickBooks Team
    QuickBooks Team
    April 29, 2022

    I am wondering, if you suggest create expense account for payroll tips, how will you link them with undistributed tips that are setup in chart of account as Undistributed Tips as liability account that connect tips paid by patrons and distributed to employees thru payroll. The account Undistributed Tips should be balanced.


    Hello there, @ML55.

     

    I'm here to ensure your Undistributed Tips account is balance. 

     

    Linking an expense account into a liability account (undistributed tips) is not possible. You may create a Journal entry to move the expenses to the undistributed account. 

     

    While doing this, I recommend consulting an accountant for additional guidance on posting correct accounts. This way, you're able to make sure that your account stays accurate. But if you don't have one, you may use our Find an Accountant tool. 

     

    To create a journal entry, here's how:

    1. In the left menu, click the + New button.
    2. Select Journal entry.
    3. Under the Journal date, enter the date.
    4. Enter the other necessary information.
    5. Select Save and close.

     

    For future help, to ensure your QuickBooks balance matches with your bank or credit card statement balance, here's an article about reconciling an account : Reconcile an account in QuickBooks Online.

     

    Get back to me here if you have any other concerns in managing your QuickBooks account. I'm always here to help. Take care always.

     

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