Question

Payroll Tips

Forum|Forum|4 years ago
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?

Workforce Payroll

JenoP

QuickBooks Team

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:

Go back to the Gear icon and select Payroll Settings.
Look for Preferences and click on it, then select Accounting Preferences.
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.
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

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

ML55

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:

In the left menu, click the + New button.
Select Journal entry.
Under the Journal date, enter the date.
Enter the other necessary information.
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.

Hi Mirriam,

I am accountant and know very well how to do journal entries. I am relatively new to QBO and find more and more that QBO is not developed well to meet accounting needs compare to QB Desktop version. As I read thru different posts, supposed to be two ways of dealing with paycheck tips paid by patrons. One of them to post them as Tip Income and process the tips thru payroll as expense. Second way,as it is stated, can be done by posting paid tips to current liability account "Undistributed Tips" and then distribute them to employees thru pay checks. The problem with QBO development is that these accounts impossible to link without doing manual work thru creating separate expense account like Paychecks Tips and manually balance "Undistributed Tips" account thru additional J.E.. It does not make sense. In my opinion, QBO should able to link account "Undistributed Tips" on both ends: patrons pay of tips and payments them to employees.

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