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amber@jeremysfar
March 11, 2023
Question

Credit Card tips paid in cash daily prior to payroll. Cash account paid from was cash sales. How does this appear in the profit and loss?

  • March 11, 2023
  • 1 reply
  • 0 views
My accountant has the tips as a liability but they were already paid. P&L show gross wages (including tips) but does not show the income from sales to offset what what already paid out.

1 reply

MariaSoledadG
MariaSoledadG
March 11, 2023

Tips show up on the report depending on how it is entered. I'm here to guide you on how this work in QuickBooks, amber.

 

Cash tips are those your employees receive directly from customers in cash, not through a paycheck. Thus, tips given through credit card charges converted to cash are considered Cash tips. This means that the amount won't show up on any financial report as the business didn't get any hold of the tips as it is directly given to the employees by their customers.

 

However, if the employer is getting the tip first and then gives it back to the employee through payroll, you'll have to set it up as Paycheck Tips. It will show on the Profit and Loss under their Wages Account, but won't be able to determine it as Paycheck Tips. 

 

Furthermore, you can access some of our payroll reports if you want to take a closer look at your business and employees. Go through this article for your guide: Run payroll Reports.

 

Please get back to us if you have any questions about tips or payroll. We'll always be right here to help you.

A
amber@jeremysfarAuthor
March 13, 2023

I’m trying to get an accurate P&L from last year. Paychecks have already been DD and W3 submitted to IRS. What if I didn’t use the Cash Tips feature when paying out the portion of credit card tips they were paid in cash? Instead I put the full amount of reported credit card tips in as Paycheck Tips and then deducted the amount already received in cash as “Retained Tips”. So they didn’t get that money twice. My questions are: Are the “Retained Tips” (which 100% equal cash sales) on the P&L recorded as a payroll expense or asset? If I had used the “Cash Tips” feature, what default account does Quickbooks use to deduct and track them for the BS and P&L? Is it an asset or liability? 

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