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Setting up account properly to account for tips

I own a restaurant. Every day I run a sales report. I enter the sales receipt into quickbooks. Food , Liquor, Beer. Everything is noted as cash drawer. When the credit cards settle the next day they go into my bank account. I use the cash drawer as the account that the funds come out of. Problem- How do I account for credit card tips? Example- $200 in sales goes into "cash drawer". Credit cards settle the next day- $100 payment + $50 tips. but I paid those $50 to staff already so how do I account for them?  

4 Comments
Senior Explorer *

Re: Setting up account properly to account for tips

You could set up a current liability account for tips collected.  It will basically be a clearing account for the tips.  When you pay out the tips from your cash drawer record it as a debit to the tip liability account.  When you received the credit card payments record the tips as a credit in the tip liability account.  If the account has a balance in it, it means that either you haven't paid out all the tips or your haven't collected from the credit cards yet.  

 

 

The tips don't affect your profit or loss, but you need to track them for each employee to report properly to the IRS.

Anonymous
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Re: Setting up account properly to account for tips

Hi,

 

Many people handle this by recording the total credit card charges (including tips) and the net cash (cash sales MINUS paid out credit card tips) on their daily sales entry.

 

This has the bonus of making your credit card deposits reflect your deposits to the bank (usually) AND the cash hitting your cash on hand or safe account being the actual cash you are supposed to have collected at the end of the night.

 

Typically, people who use this method (myself included) are recording tips by employee elsewhere and a part of the nightly cash-out process and tip-share/tip-out process.

 

Kristen Nies Ciraldo

Not applicable

Re: Setting up account properly to account for tips

Hello, in an self employ how do I find my company I’d?

QuickBooks Team

Re: Setting up account properly to account for tips

Let me share some information on how to get your company ID, @Tvnews

 

You can get your company ID from the payment receipt that you'll be receiving from Intuit every month for your subscription. 

 

That'll be sent to the email address associated to your QuickBooks Self-Employed  account. 

 

For other concerns about your account or anything else, let me know by leaving a comment below. We're always here to help. Have a good day!

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