What is the proper way to distribute tips to employees when credit cards are used? Do I find out what the tips are, and just give the employees cash?  Are the tips taxed/ is there a Square charge on tips?

Could someone please answer this?  I am a new Square user and have no idea how to handle dispersing tips to employees that were paid with credit card.

You should decide and document your organization's process for dispersing tips. All of your credit card transactions are reported to you and the IRS by Square on a 1099-K form. Tips paid on credit cards are still charged the same card processing fee as the rest of the card amount processed.

I am not a lawyer or an accountant, so the following information is based on my experience and on my opinion. That said...

Credit Card Tips paid to employees should be reported as prepaid or owed, with your payroll.

Cash tips paid by customers directly to employees, should be reported by the employees and logged daily by the employer. Discuss this with your accountant or tax professional.

As far as the Square fee paid on the tip portion of each transaction, you can choose to pay employees the full tip amount and the difference will wash as an expense, or you can pay the employee 97.25% of the credit card tips. We chose the latter of those options, but it's important to inform your employees of this process.

If I create different employee profiles, will they be able to track the tips that they recieved individually? Or should I set up different locations for this? I would like to know how to tip my server vs. the cashier. Thanks!

@brookedrussell, yes! If you're using employee management, you can view sales and tips collected per employee here: https://squareup.com/dashboard/sales/reports/employee-sales

It doesnt work. The end of shift report under an employees login, is not matching the device report. Ive run end of shift reports for staff  and the tip total does not match the report that can be run for all sales/tips on that same device as a total for the day. how is that possible?

I am sure this has been asked and answered before, but why oh why would you not be able to see cash drawer start and end of day on android and iphone devices. Our employees work multiple locations with their own devices and they cannot be carrying around tablets. Although I am thinking it may be that we have to go this route which makes square not so inexpensive to use anymore. Oh well. If you can post this somewhere else or send to the developement team we would greatly appreciate a simple way for employees using their own devices to see the cash they should have on hand at end of day. Can't run a business very well without keeping track of these things.

@PVS - I'll be sure to pass along the feedback! 👍

I'm trying to distribute tips manually through square payroll. Square has imported the timecards but there's no where to add in the additional CC tips. Is there a way to do this?

Sean -- you said to measure out tips and "include this in the pay amount" -- where is the function to add in additional moneys manually? I am not seeing it.

Helen here stepping in for Sean!

It sounds like you're trying to record when you add money to the cash drawer? This Support Center article has the steps to record cash paid in to the cash drawer. 

Let me know if you have any other questions. Happy to help! 

Sean, this does not answer the questions.  I, too, have been asking how to track "tip outs".

1.  True, we can see the employee sales and tips on those sales reports

2.  FALSE, not a good report to use for tracking tip-outs as employees sometimes don't take all their "tips" as we require them to allocate a % to bar, % to bussers etc.  We enter the Tips on the employee report MINUS what they are tipping to the busser / bar and record that as a tip out.  The total of tip-outs  at the end of the night would then equal the total of all employees tips.  However, there is no place square has created a report to view the tip-outs cumulatively as they are paid to different employees.

This could easily be fixed with some quick coding by your developer people.  When we do a "pay-out" there should be a "dial down" for pay-out reason... Pay vendor?  Petty Cash expense?  Tip-out?  If tip-out is selected, there should a secondary screen requiring a certain employee to then be selected.  Once that screen is "applied" (or saved), it should print a ticket for us to have the server sign for their cash.

We are managing with a daily spreadsheet system where servers sign for their cash.  However, when it is time to do payroll, it is a lot of calculations to get to the number we need to report on their paycheck as tips received.  

If Square is going to purport to be a POS - and you do - and allow for tips to be received, it is reasonable for the users to expect a "pay-out" report.  Don't you agree?

Thank you

Ann

@BBdining Thanks for your post and for letting us know what you need from Square to be able to manage your employees tips. 

It does sound like the current reports aren't a good solution for your business at this time, especially if your employees are splitting tips between different teams. I know a lot of businesses share tips so I will send your suggestion with the Employee Management and Reporting teams. Hopefully this is a feature we can offer in the future so you can get rid of the spreadsheets once and for all! 

Not only should there be a payout report, instead of having to manually comb through what was typed into the reason for a payout (huge time suck to filter what was for tips or groceries of other petty cash out of the till);

bigger issues im having is that The end of shift report under an employees login, is not matching the device report. Ive run reports for staff and the tip total does not match the report that can be run for all sales/tips on that same device as a total for the day. how is that possible?

is there away to cash out tip at the end of the day 

Hi there, @cambrej 👋 Thanks for reaching out and joining us here on the Seller Community! 

I've gone ahead and merged your post into an existing thread of Sellers who were also looking for information regarding cashing out tips. Take a look at this Best Answer from Sean - he will walk you through the process and add some helpful context.

@ThierrLRC Awesome add-on! 🙌

@winesalot @WakinUpWaggin Does this help out? 

We do it similarly to as described above. At the end of the day we have our employees record their cash and credit tips in a log book. The employees leave with their cash tips at the end of the day. The credit card tips are called into the our payroll company and added to the employees check each week.