Record tips or unapplied payments on an invoice

Learn how to turn a customer overpayment or credit into a tip in QuickBooks Online.

When a customer overpays an invoice to give you a tip, you need to record the income. If you have a QuickBooks Payments subscription, you can turn on tips for your customer invoices.

If you'd like to make it easy for your customers to pay an invoice online, check out QuickBooks Payments rates and apply.

For a better experience, open this article in QuickBooks Online. Launch side-by-side view .

Prerequisites

• Before you can record tips, you will need to add an appropriate income account and an item to represent tips.
• State laws vary on unclaimed funds; if your customer paid you too much in error, you should contact them and arrange for a refund.

Summary of steps

To record a tip or customer overpayment in QuickBooks Online:

1. Create a Tips income account.
2. Create a non-inventory item for tips.
3. Add the tip as a line item on an invoice.
4. Apply the customer’s credit or overpayment to that invoice.

Add an income account to track tips

1. Go to All apps, then Accounting, then select Chart of accounts. (Take me there)
2. Select New. Depending on your account view, you will either see a panel labeled New account or New category.
3. Name your account "Tips" and add a description.
4. For Account type or Category, select Other Income.
5. For Detail type, select Other Miscellaneous Income.
6. (Optional) Make it a subaccount by selecting a parent account.
7. Select Save.

Note: If you see the New category panel, you are creating a subaccount under a premade parent account. If you need to create a new account type, switch to the accountant view.

Create a tip item

1. Go to All apps, then select Sales & Get Paid, then Products & services. (Take me there)
2. Select New, then select Non-inventory.
3. Enter a Name, such as "Tips."
4. For Income account, select the newly-created "Tips" account.
5. Select Save and close.

Record the extra money as a tip or overpayment

1. Go to All apps , then Sales & Get Paid, then Invoices (Take me there).
2. Select Create invoice.
3. Enter the Customer. 
4. In the Products/Services field, select the tip item you have created. 
5. Select Save. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
6. Select the credit and then Save and close.

About unclaimed funds

State laws vary on unclaimed funds. If your customer paid you too much in error, you should contact them and arrange for a refund.

Related links

• Create subaccounts in your chart of accounts in QuickBooks Online
• Record a customer refund in QuickBooks Online
• Switch between Business and Accountant view in QuickBooks Online