Hi Joan-

I like your answer and I'm currently using an "Unallocated Tips" liability account for one of my clients.  At the  end of each month, I create an entry to debit the Unallocated Tips liability account with the total amount of tips paid out and credit an Other Income account

The problem is that the Other Income account shows up on the P&L as part of the business's income.  Is there a better account to credit so that the income doesn't show up on the P&L?

Thanks

Greg