In my restaurant situation, we cash out tips to EE's each night. On the weekly payroll we report "tips in" so that the tips get taxed to each EE. We also include a deduction called "tips out" so that the tips are not actually paid again to the EE. The "tips in" map to the payroll expense account. Tips outs are mapped to a liability account and QBO won't let me change this. Tips out should offset the tips in in the expense account. Right now, my Payroll expenses are grossly overstated and I have a liability that should not even exist. QBO says, oh well, that's the way we do it.... Seems fraudulent to me...
