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Subject Author Date
accounting for employee tips when receiving payments <dgray10567 01-08-2008
Posted by <dgray10567 on January 8, 2008, 12:32 am
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 I mailed an invoice to a customer for $255. The customer sent a check back
for $295 which included a $40 tip for the employees who serviced the
customer. When I receive the payment, I have $40 left over. How do I
account for this $40?

Thanks in advance for any assistance.



Posted by Howard on January 13, 2008, 5:22 pm
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> I mailed an invoice to a customer for $255. The customer sent a check back
> for $295 which included a $40 tip for the employees who serviced the
> customer. When I receive the payment, I have $40 left over. How do I
> account for this $40?
>
> Thanks in advance for any assistance.

You could set up both an account and an item "tips for employees".
Either add the $40 item to the first invoice or create a second
invoice for the customer for the tip alone. Use the "extra" $40 to
"pay" the invoice. Then cut a check for the employee and charge it to
the "tips for employee" account. As long as you pay out the $40 there
will be no impact on your income and no tax effects.


Posted by Laura on January 13, 2008, 5:54 pm
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Better yet, create a "tip for employee" PAYROLL item and include the taxable
tip on their next paycheck. It is taxable wages.

>> I mailed an invoice to a customer for $255. The customer sent a check
>> back
>> for $295 which included a $40 tip for the employees who serviced the
>> customer. When I receive the payment, I have $40 left over. How do I
>> account for this $40?
>>
>> Thanks in advance for any assistance.
>
> You could set up both an account and an item "tips for employees".
> Either add the $40 item to the first invoice or create a second
> invoice for the customer for the tip alone. Use the "extra" $40 to
> "pay" the invoice. Then cut a check for the employee and charge it to
> the "tips for employee" account. As long as you pay out the $40 there
> will be no impact on your income and no tax effects.
>


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