Paycheck Tips sync with Undistributed Tips Account

Forum|Forum|7 years ago
March 5, 2019
8 replies
0 views

Could somebody please explain how to link the "Paycheck Tips" feature of QBO Payroll with the "Undistributed Tips" liability account?

It seems intuitive that you would pay tips using the "Paycheck Tips" feature, and they would credit against the "Undistributed Tips" liability account as they are paid, but this does not seem to be the case. What am I missing?

It has been suggested that I create and/or use an expense account, but this seems wrong, as the tips are not my expense, but money I am simply holding and owe to another entity, like sales tax or employer taxes. In this case, my employee is the other entity, and their tip payment should not be my expense.

Isn't there a way to use the "Paycheck Tips" feature to pay out of the "Undistributed Tips" account, just like with sales tax payments, for example?

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r-mitchell

Tips in would be income and tips out will be an expense, QB online does not allow these accounts to be under liabilities, the important thing at the end would ensuring that the balance resort to Zero. In simple term because this funds are paid to your business, and not as a loan from your self or family into the company it is considered an income. And because you are also paying this out to the staffs it is also considered an expense which works similarly to a liabilities account

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ShipwreckedNYC

I also have this same problem. This works perfectly in Quickbooks Desktop. Now that I'm using Quickbooks Online, it doesn't associate the paycheck tips with the liability account. Has anyone resolved this? What a pain.

T

TK2010

Did you ever figure this out? I am in the same boat where the credit card tip received off the Sales Receipt is recorded directly to the Undistributed Tips Liability Account. When I process payroll and use the Paycheck Tip set-up in QuickBooks Online to pay out the tip, not the tip in and out option since it wasn't cash, it won't reduce my liability. This has to be done by a journal entry each month.

M

Milena11

I have the same setup and the liability account (Unpaid Tips) is untouched after paying tips out. So what is the correct journal entry to clear out this liability account?

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Diane B1

Did you ever get an answer to this question? I still have $$ sitting in Undistributed Tip (Liability account) and I'm not sure what Journal Entry to enter. I also paid out all tips using "Paycheck Tips".

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VeeHog

Since the creation of tips on the Sales Receipt defaults to Undistributed Tips, why does it have to be so difficult? Requiring a journal entry to clear this account is a lot of extra work for a small business. Money comes into the liability account, goes out on the paycheck. QBO, please fix this.

A

abba

Would be nice if a Quickbooks rep could answer this....

C

catd

I also really need a solution to this issue.

A

atobroadside

I have the same issue as well. Would be nice when you pay out tips in payroll check the amounts are also deducted from undistributed tips account. Does anyone know what journal entry i can use to fix this and zero out the undistributed tips account correctly?

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MF Arepas

Did anyone come up with a solution? I have the same issue.

MorganB

Good morning, MF Arepas.

Thanks for reaching out here in the Community. I'd be glad to provide some info regarding accepting tips in QuickBooks Online.

Depositing tips to your bank account will debit the bank, and credit the tips account. The credit will be listed when the deposit has been made.

I recommend checking out the following article for details on how to record tips and gratuities in QuickBooks. This next link provides even more info about tips and paychecks. Lastly, this article mentions the steps to add tips to sales receipts.

I suggest speaking with your accountant about this information, and to find out the best way to make these entries, depending on your account set up.

If you need assistance with the entries or anything else, please don't hesitate to reach back out. I'll be here to help in any way that I can.

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jdodge

Has anyone figured out how to do this? The amount under Payroll Expenses for Employee Wages is their total paycheck amount, including tips, but I still have Undistributed Tips as a liability. Do I need to go back and edit the way I entered Tips on the sales receipts as its own line item instead of using the QB Tips option?

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SashaMC

Welcome to the QuickBooks Community, jdodge. For this particular situation, we recommend that you reach out to an accountant to see what is the best approach for your business. If you do not have an accountant, no worries, we got you covered! We have a program called ProAdvisor, where experts provide helpful insights to guide your business. They even offer a free consultation. Here's how to connect with them:

Select this link to go on the website.
In the Find an expert in section, choose what you're looking for, then use your search field to enter a City or ZIP code.
Select Search.
Browse through the results and find one that works best for your business.

Please let me know if you have any questions on concerns. My team and I will do our best to assist you. I hope you enjoy the rest of your day!

C

catd

The usual useless reply from a QBO advisor who actually has no idea what the person asking the question is talking about.

As for the original question, I have to create a journal entry every payroll to deal with this issue.

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jhavanki

This is an old post, but I am still experiencing the same problem in QB Online. Is there a solution to Crediting Tips Payable via Payroll automatically?

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