If your company receives tips from customers, these need to be accounted for in your books accordingly. Although this creates additional steps for your bookkeeping process, it’s something that needs to be done to protect yourself and the business and create a paper trail for all.
To accurately record tips in QuickBooks, you first need to create a Gratuity/Tips Liability Account. Why? This is because the tip money belongs to the employee, so it is a liability to you, as the business, until they receive their tip payment. This liability account should be used to just track tips. If you have multiple employees that receive tips, you may find it beneficial to break down each item by each employee’s name and their tip amount.
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