accounting for employee tips when receiving payments


G

Guest

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.
 
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H

Howard

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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L

Laura

Better yet, create a "tip for employee" PAYROLL item and include the taxable
tip on their next paycheck. It is taxable wages.
 

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