I am adding late fees to customer invoices. When the customer pays, I link it to the invoice to close it out. I am not seeing late fees being split into the other income

Hello there, mahn.

I'm here to share some information about how late fees work in QuickBooks Online (QBO).

In QBO, if you create a late fees item manually in QuickBooks you'll need to ensure that you've chosen "Other income" as the account. However, if you turn on the late fees settings, it'll automatically create a late fees item as other income account.

With this, if you create a late fees item manually I recommend inactivating it to avoid duplicate items when you turn on the late fees.

Here's how:
 

1. Go to Settings ⚙, then hit Products and services.
2. Find the late fee you want to inactive.
3. In the action column, click the drop-down arrow and Choose Make Inactive.
4. Hit Yes to confirm.

Please see the article for more information about handling late fees: Apply late fees to overdue invoices automatically in QuickBooks Online.

I'll include this helpful article that you can use as a guide in recording your customer payments: Record invoice payments in QuickBooks Online.

I'm always here ready to lend a hand if you have any other concerns about managing customer late fees and invoices in QuickBooks. Have a good one and stay safe.