How to record and pay tips paid out daily at restaurant

Hi, Sandy.

You can create a sales receipt transaction that includes the total tips collected as part of your daily sales.

First, we can create a Non-inventory item for the tips associated with a liability account and add it as a line item for the transaction.

Here's how:

1. Go to the Gear Icon, in the upper right corner.
2. Select the Product & Services.
3. Click on the New drop-down and choose Non-inventory item.

1. 
2. From there, enter the necessary fields.
3. Once done, click Save and close.

After that, you can now create a sales receipt for your total sales and tips collected.

Here's how:

1. Hover over your cursor to the +Create menu.
2. Choose Sales receipt under the Customers column.
3. From the Sales Receipt window, fill in the necessary fields.
4. Ensure that you choose the Payment method and deposit it to Undeposited Funds.
5. Add line items for your daily sales (e.g., Food Sales, Beverage Sales, etc.) and include a separate line for Tips using the Non-inventory item you created earlier.
   
6. After that, click Save and close.

Once the Sales receipt is created, record the payout of tips to employees using a Bank Deposit. Follow these steps:

1. From the +Create menu, click Bank Deposit.
2. Choose the appropriate deposit Account.
3. Select the Sales receipt you created, which includes total sales and tips.
4. For Cash Payments, ensure to include a negative line item for the tips to reflect the amount paid out to the employees from it.
   
5. For Credit card payments, deposit the total amount collected, including the tips (adjust for fees if needed).
6. Lastly, click Save and close.

It’s also recommended to consult an accounting professional if you’re unsure of the process. They can help ensure the structure is set up correctly, preventing any discrepancies in your financial records or reporting.

You can also check out this article on how to report your employee's earned tips in QBO Payroll: Pay and report tips.

If you have further questions, feel free to add a reply below.

Hello, Sandy.

I’m following up to see if the solution we provided worked for you.

Did it resolve your concern, or are you still experiencing difficulties?

We're happy to assist further if you need any more help.

Hi!

Thanks so much for the reply. I am going to try this and will let you know.

Much Appreciated!

Hello,

Still having issues with this. Daily Sales are recorded and there is a separate line for undistributed tips.

This is then deposited into clearing account. When the credit card payment is deposited at the bank, it comes out of the clearing account and shows in checking.

The tips are paid out daily from cash.

Our daily deposits are credit card deposits which include tips. 

Cash Sales are deposited twice per week. 

The clearing account shows a daily split. One is a deposit and the other is the tip amount shown in the payment column. Quickbooks Online does this automatically. 

But these amounts that are payouts of the tips are not showing in the undistributed tips register. 

Any help would be most welcome.

Thank You!

Sandy1131

Thank You so much!  You made it very clear and it worked!  Balance is now zeroed out in the register!

This is the first time I have ever dealt with TIPS and I must say after using QuickBooks since 1995, it was a little embarrassing that I just could not figure this out.

Blessings and Happy New Year!

On behalf of my colleague above, you're welcome, @Sandy1131.

Please know you can reach back out to the QuickBooks Community any time you need a helping hand. Take care and have a wonderful day ahead!