If you receive tip income (gratuity) be sure to account for it in your CRM. While tips are not subject to sales tax, they are subject to both state and federal income tax and you will need to show them on your P&L.

Also, be sure you deposit the tips into your business bank account so they can be traced.

What if the tips need to be paid out to employees or contractors?

Paying tips out to employees

Paying tips out to contractors

✅Process Complete

Updated 2/24/25