QuickBooks has a special feature of letting you enter or add different kind of tips in the form of paycheck in QuickBooks payroll. When you are an owner, your Employee may get tips from the vendors for the purchases made and when you are a salesman, your customer is entitled to get some tip or discount which in turn need to be recorded in the books properly. Hence, in this article we will learn how to add tips in QuickBooks payroll effectively. But first of all we need to understand all kinds of tips.
Tips can be of three types
- Cash Tips
- Credit Card Tips
- Allocated Tips
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It’s is important for you to keep record of the amount that is received by your employee in the form of tip from any of your customer. Since this amount is accountable and is to be recorded properly in the Paychecks so as to avoid recurrence of cash tips payments to their Employees from particular customer. To keep the record of cash tips in a pay checks, payroll items is to be created.
Credit Card Tips
In some cases, your Employee offer some tips on credit card for making some purchase from them. These tips are to be recorded in your Employees paycheck by creating payroll items in QuickBooks Payroll.
Payroll items are to be created for the tip amount that is taxable.
- Step 1 is to select list thereafter choose Payroll items list.
- Payroll item thereafter new is to be selected.
- You need to select a custom set up thereafter next is to be selected.
- Now you need to select Addition after addition, next is to be selected.
- You need to give name to the items like Tips and then next button is to be selected.
- Expense account is to be selected thereafter click on to next.
- Reported tips are to be chosen by you in the tax tracking type window. Thereafter select next is to be followed by next.
- You need to select neither from the calculate based on quantity window, and then click on Next.
- You need to select Finish from the Limit Type Window.
Steps on how to create payroll item if tips were retained by employee.
- You need to select list thereafter Payroll item list is to be selected from QuickBooks Desktop.
- Now payroll item is to be selected followed by a new icon.
- Custom set up is to be selected thereafter Next icon is to be chosen.
- You need to choose Deduction thereafter next is to be selected.
- You need to give a name to the item thereafter Next is to be selected.
- Liability account is to be selected thereafter Next is to be chosen.
- Please be ensuring that the Account name should be similar to expense account field.
- None is to be selected from Tax Tracking Type window thereafter Next followed by Next is to be selected.
- Neither is to be selected from Calculate based on quantity window thereafter Neither followed by Next is to be selected.
- Net pay is to be chosen followed by next.
- You need to select Finish from the Limit Type window.
Above settings can also be entered in Employee pay checks in the other payroll items. You need to enter the amount of each item in the rate field.
The tips that are assigned by the employer to the employees along with yearly tips that are reported by the employees for the year are called Allocated tips. For the calculations of allocated tips, gross receipts are used. These tips are assigned to employees having share of less than 8% in drink and meal sales in case they are Employees of restaurants, lounge, bars or similar kind of businesses.
If the total drink and meal sales exceed 8% then no allocation tip is assigned to any employee. These allocated tips payroll items can be created by adding to the pay checks.
Here are some easy steps to create allocated tips payroll in QuickBooks Payroll.
- You need to click on Lists thereafter Payroll item list is to be selected from QuickBooks Desktop menu.
- Click on to Payroll item List thereafter choose from the lower left of the payroll item list.
- EZ set up is to be selected.
- Next is to be selected.
- You need to choose compensation.
- Click on to the Next.
- In the other compensation section, there is a Tip that needs to be selected.
- Click on to Next.
- Now Allocated Tips is to be selected.
- The finish is to be selected.
- You need to click double on the items mentioned in the Payroll item list with the help of which you can edit or change the name, account and limit type.
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