There may come a time when technicians or employees may receive tips and gratuities from customers. You can record this information in the software by doing the following:
Setup a Chart of Account to Report Gratuities
If you already have an account to keep track of this activity, skip this step. If no account exists, you may create one. Before performing any of these steps, it is advised you speak with your accounting professional to verify specifics for your business model.
- Navigate to Lists | Chart of Accounts or Banking | Chart of Accounts.
- Right click on the list and choose the option New Account.
- In the Type drop down, choose Other Current Liability.
- Enter an account number which corresponds with your current liabilities.
- In the Name field, enter “Gratuity Received” or “Tips”.
- Enter a brief description for what the account will be used for.
- Click Ok to save.
Create an Invoice Item
Next, create an invoice item which will be an Other Charge type. You can call “Gratuity” or “Tip.” For the Income Account, select the liability account setup above. Now you can add tips and gratuities as a line item by editing an existing invoice, creating a new invoice for just this tip, or creating a sales receipt including the tip amount.
Paying Tips to Employees
After the Chart of Account and Invoice Item are setup, you can now pay your employees their tips in their paycheck or by creating a standard check. If you are reporting the tips as taxable wages reported on the W2, please use the payroll system to record the payment of tips. This would be to a fixed amount earning item with the liability account selected as the Account. If you are creating a standard check, please do the following:
- Create a new check by using CTRL +W.
- In the Bank drop down, select the account you are generating the check from.
- Select the employee in the Pay to the order of.
- On the Expenses Tab, select the liability account for Gratuity/Tips.
- Enter the Amount of the tip paid.
- Complete the remaining fields for the rest of the check as you normally would and click Save & Close or Print.