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?
- posted
18 years ago