Recording and paying out direct tips (excluding Quebec)

• For more information on direct tips, see the Canada Revenue Agency (CRA)'s description

Step 1: Include the tips on the Sales Invoice

1. Create a Sales Invoice.
2. Add a line item for the tip.
3. Select an account to record the tips in the corresponding Account column.

Step 2: Transfer the money from the cash register to the payroll bank account

1. Go to Banking, then Transfer Funds.
2. Select the Currency.
3. Select the appropriate Transfer from and Transfer to bank accounts.
4. Enter the tip in the Amount field.
5. Enter a Comment and post.

Step 3: Pay the tip on the paycheque

1. Create a new income for tips.
2. Uncheck Calc Tax, EI, CPP. In all provinces except Quebec, the employee is responsible for reporting tips to the CRA.
   
3. Link the expense account used in the sale to the Tips income.
   
   
   
4. Create a paycheque for the tips.