Quickbooks Desktop tax/gratuity recording for contractors

Hi there, tcpark10. I can walk you through recording the collection of tips from your customers and the disbursement to contractors.

To do this, we'll first create a non-inventory item that will be used for customer and contractor transactions. That item can be linked as a specific account that shows the debit and credit flow of the tip.

Here’s how:

Step 1: Creating a Non-Inventory for Tips.

1. Click on Lists from the top menu bar and select Item List.
2. At the bottom left, click Item > New.
3. Choose Non-Inventory as the item type.
4. Enter a name item such as “Tips from Customer.”
5. In the Account field, choose an appropriate account, such as "Tips Income" or create a new account labeled "Tips Received" if needed.
6. Click OK to save the item.

Step 2: Collecting Tips from Customers

1. Create your Invoice or Sales Receipt as usual.
2. Add a line item for the services performed.
3. Add the Contractor tips item on the next line and enter the amount.
4. Click Save & Close.

Step 3: Disbursing Tips to Contractors
 

1. Go to Banking > Write Checks.
2. In the Pay to the Order of field, select your Contractor.
3. Go to the Expenses tab at the bottom of the check.
4. In the Account column, select Contractor Tips.
5. Enter the amount of the tip you are paying out.
6. Click Save & Close.

However, you'll want to verify with your accountant whether to use an Other Current Liability account and how to handle the Tax-Line Mapping.

Feel free to reply to this post if you have more questions related to QuickBooks. We’re here to assist you.