Tips

OliviAARom · ‎March 14, 2022

Hello. Almost a month ago, an invoice was paid for my services by a third party. That was no problem. She did however leave a tip when paying the invoice. So now, it comes up as an overpayment and says there is a credit for that customer. This was supposed to be a tip. The person who paid the invoice asked me today for a copy of the paid invoice but when I pull it up, it just shows the amount of the invoice and doesn't not show the tip. She needs the tip amount to show up on the paid invoice in order for her to get reimbursed by her company. How can I do this and how can I correct QBO for it not to be an overpayment with a credit but rather a tip that needs to be recorded as income? I have had the tip feature enabled since I created my QBO account.

DivinaMercy_N · ‎March 14, 2022

I can share a way on how you can record the tips on the invoice, @OliviAARom.

In QuickBooks Online (QBO), the tips feature is only available in the sale receipts forms.

For recording tips in invoices, there are two options you can perform. You can either add it as an item or include it when you deposit the invoice payment.

Also, the tip item will not affect your sales income as long as you set up the associated account accurately.

Once you enabled the Tips feature, QBO automatically creates an account for it. However, you can also create one manually. Here's how:

In your QBO account, click the Gear icon and choose Chart of Account.
Next, select the New button.
Then, pick Other Current Liabilities in the Account Type field and choose Other Current Liabilities in the Detail Type section.
Once done, enter the account name. Example: Tip Revenue. Then, click Save and Close.

When finished, let's set this as the income account for the tip item:

Navigate to the Gear icon and select Products and Services.
Next, click the New button and choose either Service or Non-inventory as the item type.
Input the tip details and scroll down to the Sales information section.
From the Income account field, select the account for the tips you've recently created
Then, click the Save and Close button.

Once finished, you can add the tip item on the invoice and enter the corresponding amount.

You'll also want to check this article for additional ways on how you can record tips in QBO: Record an invoice overpayment as a tip.

Just in case there will be instances that you need to return your customer's money, you can record it as a refund in QBO.

I'm always willing to help you if you have any other queries about recording tips in QBO. It will only take me a few clicks to respond. Wishing your business never-ending success. Have a good one.

View solution in original post

DivinaMercy_N · ‎March 14, 2022

I can share a way on how you can record the tips on the invoice, @OliviAARom.

In QuickBooks Online (QBO), the tips feature is only available in the sale receipts forms.

For recording tips in invoices, there are two options you can perform. You can either add it as an item or include it when you deposit the invoice payment.

Also, the tip item will not affect your sales income as long as you set up the associated account accurately.

Once you enabled the Tips feature, QBO automatically creates an account for it. However, you can also create one manually. Here's how:

In your QBO account, click the Gear icon and choose Chart of Account.
Next, select the New button.
Then, pick Other Current Liabilities in the Account Type field and choose Other Current Liabilities in the Detail Type section.
Once done, enter the account name. Example: Tip Revenue. Then, click Save and Close.

When finished, let's set this as the income account for the tip item:

Navigate to the Gear icon and select Products and Services.
Next, click the New button and choose either Service or Non-inventory as the item type.
Input the tip details and scroll down to the Sales information section.
From the Income account field, select the account for the tips you've recently created
Then, click the Save and Close button.

Once finished, you can add the tip item on the invoice and enter the corresponding amount.

You'll also want to check this article for additional ways on how you can record tips in QBO: Record an invoice overpayment as a tip.

Just in case there will be instances that you need to return your customer's money, you can record it as a refund in QBO.

I'm always willing to help you if you have any other queries about recording tips in QBO. It will only take me a few clicks to respond. Wishing your business never-ending success. Have a good one.

OliviAARom · ‎March 15, 2022

Thank you so much for this. I followed all of the steps but when I am making the invoice for the overpayment to record as income, the invoice is taxing the tip. So, for example, the tip was 62.26 and when I put that amount, it's now adding tax and it looks like the customer now owes a few dollars for the tax. How can I make the tax go away on something like this as I just want to record it as income and get the tip that this customer paid to show up on her paid invoice? Which now I am thinking I will have to send her 2 invoices, one for the amount she paid for the service, and another one that shows the tip for the service.

CharleneMaeF · ‎March 15, 2022

Thanks for updating us on this, OliviAARom. I appreciate you for using QuickBooks Online in recording your sales transactions. Not to worry, I'm here to help you sort this out.

Before proceeding, I'd recommend consulting an accountant to make sure the tips aren't taxable. If you don't have one, you can use our Find-an-Accountant tool to look for an expert near you.

Once you've confirmed they're nontaxable, let's edit the invoice and uncheck the box on the Tax column. This ensures the tips are tax-exempt.

Here's how:

Go to the Sales menu.
Select the Invoices tab.
Locate the invoice, then click the edit icon.
Uncheck the box on the Tax column.
Once done, click Save and Close.

For details about managing your sales tax, please see these resources:

Additionally, I've added an article that'll help you personalize your sales forms in QuickBooks Online. This helps you add the info that matters most to your business: Customize Invoices, Estimates, and Sales receipts.

Please let us know how it goes, OliviAARom. We want to ensure this issue is resolved. Take care always!

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