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My new hire is getting paid commission and gratuities. How do I add tips to payroll?

 I'm a salon owner who's recently hire a new employee. My employee will get paid hourly or comission, which ever is higher. I'm using the payroll app. My question is, am I supposed to report cash and credit card tips? if so, is there a step in the app where I can put it down? thanks

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Best Answer

Hi @waxmeb — welcome to the seller community! 👋🏻

 

Yes, with Square Payroll, you can add the amount of tips your employee receives through the Tips Paid column on the Run Payroll screen. While there is not a way to pay out tips via direct deposit, Payroll will calculate the amount to be taxed for each employee's tip amounts once they've been added. You'll want to refer to the Tips Paid column to ensure that tips already paid out to your employees are taxed appropriately.

 

For step-by-steps on adding bonuses, commissions, tips, have a look at the video tutorial below.

 

 

In addition, find more information on paying your employees in our Support Center.

 

Please keep in mind that we aren't able to offer tax advice — you may want to check in with a tax professional regarding how to report on tips. Hope this helps get you in the right direction and please let us know if anything else comes up! 🙂

️ Tom | he/him
Seller Community Manager | Square, Inc.
Find step-by-step help in our Support Center

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Best Answer

Hi @waxmeb — welcome to the seller community! 👋🏻

 

Yes, with Square Payroll, you can add the amount of tips your employee receives through the Tips Paid column on the Run Payroll screen. While there is not a way to pay out tips via direct deposit, Payroll will calculate the amount to be taxed for each employee's tip amounts once they've been added. You'll want to refer to the Tips Paid column to ensure that tips already paid out to your employees are taxed appropriately.

 

For step-by-steps on adding bonuses, commissions, tips, have a look at the video tutorial below.

 

 

In addition, find more information on paying your employees in our Support Center.

 

Please keep in mind that we aren't able to offer tax advice — you may want to check in with a tax professional regarding how to report on tips. Hope this helps get you in the right direction and please let us know if anything else comes up! 🙂

️ Tom | he/him
Seller Community Manager | Square, Inc.
Find step-by-step help in our Support Center
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Hi,  for some reason the Tips Paid is NOT showing as an option for me.  How can I add it?  I have 5 servers with paid tips...  Please help!!!

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Square

Hi @antiguamke. Sorry to hear about the trouble! Have you tried resetting or switching browsers? Google Chrome is my go-to browser for our site. If so, please reach out directly so we can have a closer look.  


Sean
he/him/his
Product Manager | Square, Inc.
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I don't see the "tips paid" column on my payroll screen. I'm using chrome and have a 2015 Macbook pro.

 

thanks

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Admin

Hi @swags, thanks for flagging this an sorry for the confusion. I can't help out with account-specifics here but these troubleshooting tips usually resolve any online Square Dashboard issues right away: Square Dashboard Troubleshooting. If that doesn't get you where you need to be, I'd suggest checking in with our Payroll Team directly—they'll be able to get to the bottom of this ASAP.

️ Tom | he/him
Seller Community Manager | Square, Inc.
Find step-by-step help in our Support Center
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Beta Member

I don't have a "tips paid" column either.

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Hi, I have a question beyond what is in the video. I'll be hiring our first employee May 1st so i'm looking to see how Square and Xero handle commission. I'd like something automated that scales for more employees. 

 

I am curious how people calculate the commission. For example if the employee gets 50% commission on all services provided, where in Square payroll do we point it to services provided by that employee for the pay period? Or do I need to run a report per employee per week to list all the services they provided and then manually enter each as the video describes? How would I build a report to show itemized sales of services not including tips/tax per pay period per employee?

 

Has anyone linked square to Xero and done payroll with Xero instead? It looks like they can  handle automating the process but I would love to hear what someone thinks. 

 

 

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Admin

Thanks for surfacing, @andreas, and congratulations on hiring your first employee!

 

I'll touch base with our Payroll Team and see if there are any best practices for this. You may also need to touch base with Xero directly for more insight: Xero Support.

 

Appreciate your patience!

️ Tom | he/him
Seller Community Manager | Square, Inc.
Find step-by-step help in our Support Center
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Are we able to get an answer on this? I am going through a similar situation at this time and this information would be very helpful

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Admin

Hello @reclaimergold! At this time there isn't a way to automatically pull in your employees' commission into Square Payroll. I see how that would save a lot of time so I'll share your feedback with the Payroll Team!

 

In the meantime, if you're using Square to track your employee's sales you can view and download a report from your Square Dashboard. Please let me know if you have additional questions about this! 

 

️ Helen
Seller Community Manager

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How do I tip out employees at the end of their shift.  Does it show up on the check stub and do I need to enter a payout or will it be deducted automatically for credit card tips.

 

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Admin

 

This reply was created from merging an existing thread: “Employee tip payout”

 

Hello @Cristalizer! I went ahead and moved your post here so you can see Tom's Best Answer and the video showing how to add tips to Payroll. Let me know if you have any other questions. Happy to help! 

️ Helen
Seller Community Manager

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@Cristalizer  I just did this myself.  It doesn't say "Tips Paid" anymore (Square, please update your tutorial!).  There is a "+" sign at the end of your payroll columns in order to add other columns.  There is a "Cash Tips" column now that you use to report cash tips so that the appropriate amount of tax is withheld.  We keep a log and create a receipt every night that records this amount and it is given to the employee and we retain a copy.  Hope this helps!

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I don't see credit card tips addressed here. We are a cafe and ideally employees get their credit card tips based on hours worked. Do they need to be cashed out at end of each shift then recorded at end of payroll? That would be burdensome to do each shift change. 

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Have you received a response?  I need to process credit card tips, and would like them to be included into the payroll run....

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Admin

Hey @sacredgroundsm, thanks for checking in. To be sure I'm addressing your question fully, can you reply with a bit more information on what you're needing to do? Is the reply marked as the best answer not fully covering your request?

️ Tom | he/him
Seller Community Manager | Square, Inc.
Find step-by-step help in our Support Center
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Beta Member

All good 👏👏

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How can I report cash tips?

as required by the IRS, when ending a shift, employees must be prompted to report cash tips ( or a % of said tips)

what’s the requirements from setting this option up 

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Square Community Moderator

Hey there @Ash3 we did reach out to Square Payroll and they did provide the following: 

 

Square Payroll allows you to declare taxes on cash tips already paid to your employees and add tips from credit card payments to their paychecks. When running payroll, you can click the plus button (+) next to the “Gross Pay” column and indicate if you wish to pay your employee cash tips or paycheck tips.


To declare cash tips already paid, enter the amount into the Cash Tips field. The amounts you enter into this field will not be paid out to your employees but will be taxed. You can use this column to ensure that cash tips paid out to your employees are taxed accordingly. To reiterate, the amounts you enter into Cash Tips will not be paid out to your employees but will be taxed while those entered into Paycheck Tips will be added to your employee’s paycheck and taxed.

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How do I add tips to payroll

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