@DanG91 The employees turn in their tip sheets for you to keep. You may have to allocate tip income if the paperwork is not enough. You are responsible for making sure their tips are reasonable, reported, and taxed. Tips are not a part of your business income.
From Wolters Kluwer, Employers and Tips:
You are responsible for withholding income taxes and FICA (social security and Medicare) taxes on reported tips, and for paying the employer's portion of FICA and FUTA taxes on them, even though you have no control over the amount of tips the employees receive.
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