I have a restaurant, I am not sure how to account for cash tips and am quite sure I have been doing this wrong. I cash out my employees tips every shift.
I believe I need to set up a Petty Cash account and deposit money from my business checking account where sales are deposited. And then use this account to cash out the employee tips.
I use QB online for payroll; every pay period I record and report tips employees have received. Is there a way to connect the tip line from the employee pay to credit against the Petty Cash account or will I need to go back and manually enter each one? Help much appreciated!
In QuickBooks Online Payroll, we can only use one bank account when paying employees. If you need to track cash tips in the petty cash account, you can transfer the funds from petty cash to the actual bank that you use to pay your payroll expenses.
Go to the +New menu.
In the Transfer Funds From drop-down, select the petty cash account.
Select the bank account you use to pay your expenses in the Transfer Funds To drop-down.
Enter the transfer amount.
You can enter other details in the Memo field.
Select Save and close.
I've added some articles that I'm sure you'll find helpful regarding cash and paycheck tips: