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Sandy1131
December 10, 2025
Solved

How to record and pay tips paid out daily at restaurant

  • December 10, 2025
  • 1 reply
  • 26 views

I am using QuickBooks online for our restaurant. Tips are paid daily form cash received or credit card receipts. How do we incorporate into daily sales receipt and then pay out?

 

Thank You.

Best answer by BonJulius_G

Hello,

 

Still having issues with this. Daily Sales are recorded and there is a separate line for undistributed tips.

 

This is then deposited into clearing account. When the credit card payment is deposited at the bank, it comes out of the clearing account and shows in checking.

 

The tips are paid out daily from cash.

 

Our daily deposits are credit card deposits which include tips. 

 

Cash Sales are deposited twice per week. 

 

The clearing account shows a daily split. One is a deposit and the other is the tip amount shown in the payment column. Quickbooks Online does this automatically. 

 

But these amounts that are payouts of the tips are not showing in the undistributed tips register. 

 

Any help would be most welcome.

 

Thank You!

 

Sandy1131


Thank you for coming back with more details, Sandy1131. Let me continue to assist you from here.

 

Just to confirm, are you saying that the clearing account and the Undistributed Tips Register are set up as two separate accounts in your QBO setup? 

 

Typically, there’s only one clearing account for tips (regardless of whether sales are paid via credit card or cash). But if you've set things up with two accounts, it’s totally fine if you want to track card payments separately.

 

To resolve this, create a separate tip item specifically for credit card sales and assign the "Undistributed Tips Register" account to it, following the steps outlined above. Then, when it’s time to distribute the tips to your employees, you’ll record it just like you normally do. But make sure to use the "Undistributed Tips Register" category to track the payout accurately. This way, you'll have a clean, separate record for those card-based transactions. That should get everything moving again.

 

If you have more questions, feel free to reply.

1 reply

J
Jayson_EQuickBooks Team
QuickBooks Team
December 10, 2025

Hi, Sandy.

 

You can create a sales receipt transaction that includes the total tips collected as part of your daily sales.

 

First, we can create a Non-inventory item for the tips associated with a liability account and add it as a line item for the transaction.

Here's how:

 

  1. Go to the Gear Icon, in the upper right corner.
  2. Select the Product & Services.
  3. Click on the New drop-down and choose Non-inventory item.
  2. From there, enter the necessary fields.
  3. Once done, click Save and close.


After that, you can now create a sales receipt for your total sales and tips collected.

Here's how:

  1. Hover over your cursor to the +Create menu.
  2. Choose Sales receipt under the Customers column.
  3. From the Sales Receipt window, fill in the necessary fields.
  4. Ensure that you choose the Payment method and deposit it to Undeposited Funds.
  5. Add line items for your daily sales (e.g., Food Sales, Beverage Sales, etc.) and include a separate line for Tips using the Non-inventory item you created earlier.
  6. After that, click Save and close.


Once the Sales receipt is created, record the payout of tips to employees using a Bank Deposit. Follow these steps:

  1. From the +Create menu, click Bank Deposit.
  2. Choose the appropriate deposit Account.
  3. Select the Sales receipt you created, which includes total sales and tips.
  4. For Cash Payments, ensure to include a negative line item for the tips to reflect the amount paid out to the employees from it.
  5. For Credit card payments, deposit the total amount collected, including the tips (adjust for fees if needed).
  6. Lastly, click Save and close.


It’s also recommended to consult an accounting professional if you’re unsure of the process. They can help ensure the structure is set up correctly, preventing any discrepancies in your financial records or reporting.

You can also check out this article on how to report your employee's earned tips in QBO Payroll: Pay and report tips.

If you have further questions, feel free to add a reply below.

    J
    Jayson_EQuickBooks Team
    QuickBooks Team
    December 11, 2025

    Hello, Sandy.

    I’m following up to see if the solution we provided worked for you.

    Did it resolve your concern, or are you still experiencing difficulties?

    We're happy to assist further if you need any more help.

      S
      Sandy1131Author
      December 15, 2025

      Hi!

       

      Thanks so much for the reply. I am going to try this and will let you know.

       

      Much Appreciated!

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