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thebookkeepingmama
November 16, 2021
Question

Payroll Tips

  • November 16, 2021
  • 1 reply
  • 0 views

The tips that our customers leave when they pay with their credit cards are booked to the Tips Liability account when our daily sales from Square come through.  I pay out these tips in the employees' paychecks using 'Paycheck Tips', but they are being booked to the wages expense account.  How do I get the tips paid to employees to be booked to the liability account when I run payroll?

    1 reply

    JenoP
    JenoP
    November 16, 2021

    Let me help you change the account mapping for the payroll tips, thebookkeepingmam.

     

    You can go to the Payroll Settings and change the details so the tips are booked to a different account. Here's how: 

     

    1. Go back to the Gear icon and select Payroll Settings.
    2. Look for Preferences and click on it, then select Accounting Preferences.
    3. Go to the Wage Expense Accounts section, then click the drop-down list for the tips, and then select the liability account that you want.
    4. Click OK. 

     

    Allow me to give you more articles and references for additional guidance when running payroll in QBO: 

     

     

    Reply to me or visit us again if you have further queries. We're always here to help you any time of the day.

    T
    thebookkeepingmamaAuthor
    November 16, 2021

    Thank you for your suggestion, however the instructions you gave are incorrect and your solution did not work.  I had to go to Gear -> Payroll Settings -> Accounting -> Wage Expenses -> Paycheck Tips in order to access what account Paycheck Tips is booked to.  When I click on the drop down menu to change that account, the only options I have are expense accounts.  The liability account that the tip amount is booked to through the Square syncing app is not listed.  How do I fix this?

    ~Kim

    MJoy_D
    MJoy_D
    November 16, 2021

    Thank you for getting back to us, @thebookkeepingmama.

     

    I can share some information about the account that you can set for paycheck tips.

     

    Wage expense accounts, including paycheck tips, can only be set up as expense accounts.

     

    You can edit this liability account or add an expense account for your Square. However, I suggest consulting an accountant for further guidance.

     

    See this article for more information about setting up and adding accounts to your chart of accounts: Add an account to your chart of accounts in QuickBooks Online.

     

    To know more about taxability and how cash and paycheck tips are reported on federal forms, check out this article: Supported pay types and deductions explained. 

     

    I'm always here if you have further questions about setting up your wage expense accounts and or anything else, by leaving a reply below. 

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