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QuickBooksHelp
Intuit

Share tips with your team

Learn how to record and add a tip or gratuity in QuickBooks Online.

You can share tips or gratuities with your employees without the hassle of setting up manually. Simply turn on the tips tracking feature. We'll walk you through these easy-to-follow steps.

Step 1: Turn on the tip-tracking feature

Note: Turning this on adds a “Tip” field on sales receipts.

  1. Select the Gear icon.
  2. Under Your Company, select Account and Settings.
  3. From the left menu, select Sales.
  4. Select the pencil icon on the Sales form content section.
  5. Check the Tips (Gratuity) box.
  6. The Who's receiving these tips? window opens, select My Team button.
  7. The Update your sales receipt template? window opens, select the Update button.
  8. Select Save, then Done.

Step 2: Add tips on your sales receipts.

  1. Select + New.
  2. Under Customers, select Sales Receipt.
  3. Enter the Customer name and other sales details.
  4. At the bottom right, add the tip amount in the Tip field.

Step 3: Add tips on the employee cheque

  1. Select + New.
  2. Under Suppliers, select Cheque.
  3. From the Choose a payee drop-down, select the employee to whom you are paying the tip distribution.
  4. From the Bank Account drop-down, choose the account from where you are making the liability payment.
  5. Under Category, select Undistributed Tips, then enter the tip amount in the Amount column.
  6. Fill in the rest of the cheque, then select Save and Close.

Excellent service deserves recognition and a tip. You can record and share employee tips and gratuities in QuickBooks and add them directly to your sales form.

Step 1: Create a Gratuity or Tips liability account (if you don't have one yet)

  1. Select the Gear icon.
  2. Under Your Company, choose Chart of Accounts.
  3. Select New at the upper right.
  4. From the Account Type drop-down, choose Other Current Liabilities.
  5. From the Detail Type drop-down, choose Other Current Liabilities.
  6. In the Name field, enter "Gratuity" or "Tip".
  7. Select Save and Close.

Step 2: Set up the Product/Service item called Gratuity or Tip

Note: Use this product/service when editing an invoice or sales receipt. If you use class tracking, you can reference the employee’s name and create reports to divide the tips.

  1. Select the Gear icon.
  2. Under All Lists, select Products and Services.
  3. Select New on the upper right.
  4. Select Non-inventory or Service as the item type.
  5. Name the item "Tip" or "Gratuity."
  6. From the Income account drop-down, choose the Tip or Gratuity liability account you created.
  7. From the Expense account drop-down, choose the Tip or Gratuity liability account you created.
  8. Select Save and close.

Step 3: Add tips in the employee cheque

  1. Select + New.
  2. Under Suppliers, choose Cheque.
  3. From the Choose a payee drop-down, select the employee to whom you are paying the gratuity or tip distribution.
  4. From the Bank Account drop-down, choose the account from where you are making the liability payment.
  5. Under Category, select Gratuity or Tip.
  6. Enter the Amount.
  7. Fill in the rest of the cheque, then Save and Close.

If your business pays out tips before depositing the final amount to their bank accounts

Some businesses pay out tips before depositing the final total payment amount to their bank accounts. In this case, you need to use a journal entry to remove the tips from the deposit and pay out the undistributed tips.

Record the payment.

  1. Select + New.
  2. Select Receive Payment.
  3. Select the customer who paid you in Choose a customer.
  4. Select Undeposited Funds as the Deposit to account.
  5. Select Save and close.

Create a journal entry.

  1. Select + New.
  2. Under Other select Journal Entry.
  3. For the first line, select Undistributed tips, then put the amount you paid out to employees in the Debits.
  4. For the second line, select Undeposited Funds, then put the same amount in the Credits.
  5. Select Save and close.

Record the deposit.

  1. Select + New.
  2. Under Other, select Bank Deposit.
  3. Select the original payment or sales receipt and the journal entry, this will reduce the total by the amount of the tips you paid out.
  4. Select Save and close.

You also need to record a shortage or overage on the deposit amount related to the tips:

  1. In the journal entry created, modify the Undeposited Funds line by the amount of the shortage or overage.
  2. Add a third line and select an overage or shortage account, then put the amount of the overage or shortage in the Debits.

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