Tips paid to employees in restaurant or service type business:
Tips paid via a credit card (or cash) should be deducted from sales when recording the deposit. It becomes a current liability for the employer. When preparing payroll, you would reduce this liability by this selecting as “Cash Tips” in QuickBooks Payroll. See attached screenshot.
Tips paid by you for purchases/services added to company credit card:
Normally, it is part of total charges billed to you. There is no need to separate and itemize tips separately as a line item. There are always exceptions, of course, example like dollar limit allowed by the company policy. In that case, subtract that amount and set up employees receivable (employee owes the money to the company) if paid by company credit card.
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