What accounting entries are required on staff tips within Sage
Hotel pays staff tips through the payroll, as the owner distributes the tips.
Therefore Tax & NI is deducted from the tips, but I am getting a headache trying to work out the journal entries & I am obviously missing the point.
Gross tips are banked into the current account, then a journal is created to Credit the bank & Debit the tips account. Thats the easy bit, but then, to bring the tips account back to nil, I would need to debit the tips account but how would I deal with the other side of the journal. if I credit the net amount to wages & the PAYE element & employees NIC to PAYE & NIC nominal, surely this will then mess up my figures for the P35. As from the revenues, point of view they have been paid their normal salary plus an additonal amount, be it tips or a bonus.
Would it not be easier to deal with the Gross tips as other income.........?