Set Up Employee Charge Tips

Related topics

Record cash and charge tip income during payroll entry

Set up other payroll deductions

Set up an employee

Pay employees

Perform other payroll tasks

Read the employee tips overview

Click the headings below to expand and display their respective procedures.

Note: You must subscribe to a plan that includes payroll to have access to payroll formulas and to have payroll fields calculated within Sage 50. If you don't subscribe, you can set up the payroll fields, but you will have to manually calculate and enter the amounts on the paychecks.

  1. From the Maintain menu, select Default Information, and choose Employees. Sage 50 displays the Employee Defaults window.
  2. Select the Employee Fields tab.
  3. If it is not already created, add a new payroll field on a blank line with the description of Tips. Make this a memo field and select the Adjust button for the various taxes (federal income, state income, etc.) to make adjustments to the Adjusted Gross. Click OK when completed. How do I set up a tips payroll field?

  4. On a blank line, enter CCTips as the name of the new payroll field.

    This will be distributed to the employee, so leave the Memo check box clear. Not selecting this check box logs credit card tips for reporting and tax calculations and posts an entry to the general ledger.

  5. Enter or select the general ledger (liability) account associated with credit card tips collected that need to be distributed to employees. To display a list of existing accounts, type ? in this field or select the Lookup button. To add a new account, type + or double-click the field, which displays the Maintain Chart of Accounts window.

  6. Do not select the Calculated check box.

  7. Select Fed_Income (the default Federal Withholding payroll field), or any other tax field for which tips are required in computing taxable income.
  8. Select the Adjust button. Make sure CCTips check box is selected as well as Gross.

  9. Repeat the above two steps for each applicable field (including ER payroll fields).

    Tips and CCTips will be added to gross pay when computing taxable wages. This ensures proper calculation of withholding as well as proper taxable gross reporting on payroll tax forms.

  10. Click OK to accept the changes and close the window.

The W-2 form has only one box for tips, so the two fields must be added together and the total reported.

  1. From the File menu, select Payroll Formulas, then choose User-Maintained. Sage 50 displays the User-Maintained Payroll Formulas window.
  2. Enter a formula ID (for example, W2TIPS).
  3. Enter a tax name using the NAME[space]YEAR rule. For example, enter W2TIPS 11, where 11 is the current payroll tax year (2011).
  4. Select Adds to Gross as the Effect on gross pay.
  5. Leave Filing Status at All. Clear the Appears in Payroll Tax Report Menus check box.
  6. This formula should be classified as a Reimbursement.

  7. In the Formula box, enter the following: (To create a new line in the formula, press CTRL+J.)

    "This calculation adds Tips and Credit Card Tips together. Its sum will be reported on the employee's W-2 form."

    ANSWER=Tips+CCTips

    The sentence within quotes above the actual formula is meant as a comment or reminder of how the calculation is set up. Adding the comment is optional.

  8. Save the new calculation and close the window.
  1. From the Maintain menu, select Default Information, and choose Employees. Sage 50 displays the Employee Defaults window.
  2. Select the Employee Fields tab.
  3. On a blank line, enter W2Tips as the name of the new payroll field.
  4. Enter or select the general ledger (liability) account associated with tips collected that need to be distributed to employees.
  5. Select the Calculated check box.

  6. Next, enter or select the formula name that was set up in the previous step (W2Tips).

    This is neither a Memo nor a Run field. Also, there is no need to adjust since this has already been done in the two other fields.

  7. Click OK to establish the payroll field.
  8. Now, go back to Payroll Settings. Select Taxes, and Assign Tax Fields.
  9. Select the W-2 Fields button.
  10. In the Allocated Tips field, enter or select W2Tips.
  11. Click OK, then click Finish to close the Payroll Settings window.