When I process payroll for a small retail business where the employees make tips, I record the tips reported by (and kept) by the employees as Reported Tips In (an Income payroll item, tax impact) and Reported Tips Out (a Deduction payroll item with no tax impact) and have them both hit the same G/L expense account so that they offset each other. The problem that I am encountering is that the Income item is included in the proper Class reports while the Deduction item is Unclassified. When I run a P&L by class, each class's expenses are too high by the amount of tips and then there is an Unclassified amount that offsets the total for all of the classes tips. Is there a way to get the tips deduction to the appropriate class so that my class reports are correct?
Reported Tips - Class Issue
Oct 07, 2005
4 Replies
It appears that you set up the tip reporting incorrectly. If you edit each payroll item (Tips In and Tips Out) and tell us exactly what you entered on each screen we can tell you where your mistake is.
A fast and dirty way would be to change the general lederal account that gets posted for each item to the same liabilily account instead of an expense account, but I suspect there may be other issues that you are not even aware of yet.
Sounds about right. QB's payroll has some serious class tracking issues, er bugs.
In this case it is not a bug. OP probably set it up incorrectly.
While I can't rule out user error, I am not sure where my mistake lies. I setup the two payroll items as such:
Reported Tips In:
- Track Expenses by job;
- Expense account = 6570 - Reported Tips (Quickbooks defaults to Payroll Expenses, but I have sub accounts for each item)
- Tax Tracking = Reported Tips;
- Taxes= all tax payroll items
- no default rates or calculation methods
Reported Tips Out:
- Liability account = 6570, Reported Tips
- Tax Tracking = none
- Taxes = no payroll items
- no default rates or calculation methods
Any suggestions? Thanks...SJH
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