How to track Tips Paid through Tip Payouts in 7shifts Payroll

This guide explains how Tip Payouts work in 7shifts Payroll, including how tips sync for tax reporting, how to correct incorrect balances, and how to use the Override option to reset or adjust owed tip amounts. You’ll also learn the difference between manual payouts and system-calculated payouts, how to process partial payouts correctly, and how to configure your Tip Calculation settings so all Tip Payouts flow accurately into payroll.

How Tip Payouts Sync Into Payroll

When Tip Management is set up correctly, Tip Payout amounts automatically sync into payroll under the Tips Already Paid column. This ensures the tips paid outside of payroll runs are properly taxed and included in year-to-date reporting.

To enable this behavior, the Tip Calculation setting must be configured for each location.

1. Login to the 7shifts web app as and Admin user. 
2. Navigate to Tip Management  > Settings > select Set your tip calculation.
3. Select the correct location from the list.
4. Under Tips paid on Tip Payout or payroll, click the Paid field.

5. Choose either Tip Out (Tip Pooling) or Declared (7punches) based on your business needs.

6. Click Save and preview changes.

   

Understanding Manual Payouts

Manual payouts are always treated as extra amounts added on top of what the system calculates.
They do not:

• Replace the system-calculated amount

• Reset the employee’s “Amount Owed”

• Adjust future payouts automatically

Because of this, unexpected balances may show if manual payouts were used incorrectly.

Correcting Incorrect Tip Payouts Using Override

If past manual payouts caused inflated or incorrect owed balances, you can reset an employee’s tip balance to $0 using the Override option.

How to Reset an Employee’s Tip Balance

1. Go to Tip Management > Tip Payouts.

2. Start a new batch using Automatically Sync Tips.

   • This loads the system-calculated owed amounts.

3. Find the employee whose balance needs correcting and click Edit.

4. Enter the actual amount you want to pay now.

5. Check the Override box.

6. Submit the payout.

What Override Does

• Pays the exact amount you entered

• Resets the employee’s Amount Owed to $0

• Ensures accurate tracking moving forward

Use this option when the system’s owed amount no longer reflects reality.

Paying Partial Tips (Without Resetting the Balance)

When you want the remaining unpaid balance to carry forward:

1. Start a batch with Automatically Sync Tips.

2. Click Edit beside the employee’s payout.

3. Enter the partial amount to pay now.

4. Do not check Override.

5. Submit the payout.

This pays part of the owed amount and keeps the remaining balance for the next cycle.