If your company features a policy that permits you to offer your employees advances on upcoming payroll, you'll use QuickBooks and QuickBooks Payroll to record the advance, which may then be reimbursed to the corporate through payroll deductions. We recommend that you simply document any loans to employees with terms for repayment clearly spelled out and signed by both parties.
Note: This QuickBooks tip assumes that you simply have a lively QuickBooks payroll subscription.
First, create an Asset Account to trace the worker Loan and Repayment
1. This is a one-time setup task
2. attend the Lists menu and click on Chart of Accounts
4. Click Account at rock bottom of the list then click New
5. Under Other Account Types choose Other Current Asset then click Continue
6. If you're using account numbers, enter the amount within the Numbers field
7. within the Account Name field, enter Employee Advances
8. Click Save & Close
Next, you'll either write a daily check (non-payroll) to the worker for the Advance and post it to the opposite Current Asset account Employee Advances otherwise you pays the Advance through Payroll during which case you'll got to create a Payroll Item of the sort "addition".
This is a one-time setup task.
1. attend the Lists menu and click on Payroll Item List
2. Click Payroll Item at rock bottom of the list then click New
3. Select the Custom Setup method and click on Next
5. Choose Addition and click on Next
6. Click Next
7. On the travel and entertainment account screen, choose the opposite Current Asset account, Employee Advances, that you simply created in Step 1 for tracking this expense and click on Next
8. Select None because the tax tracking type
9.Leave the taxes unchecked and click on Next
10. Select Neither within the calculate supported quantity screen and click on Next
11.Select Net Pay and click on Next
12.Leave the default rate and limit blank and click on Finish
If you set . within the Addition, Deduction and other Company Contributions enter the right rate and limit.
Then, create another Payroll Item of the sort "deduction"
1. Again, this is often a one-time setup task.
2. attend the Lists menu and click on Payroll Item List
3. Click Payroll Item at rock bottom of the list then click New
4. Select the Custom Setup method and click on Next
5. Choose Deduction and click on Next
6. Enter the name for this deduction as Loan Repayment and click on Next
7. Leave the primary two fields blank, then under the Liability account field, choose the opposite Current 8. Asset account, Employee Advances, that you simply created in Step 1 for tracking this expense and click on Next
9. Select None because the tax tracking type and click on Next
10. Leave the taxes unchecked and click on Next
11. Select Neither within the calculate supported quantity screen and click on Next
12. Select Net Pay and click on Next
13. Enter a default rate and limit if desired then click Finish
Note: you ought to only enter a default rate and limit if the speed and limit will apply to everyone using the Payroll Item. The limit could also be marked as an annual limit and if so, you'll got to manually adjust or remove the quantity at the start of the civil year or it'll start recalculating.
Create a Custom Summary Payroll report back to Track Employee Loan Balances
1. attend Reports
2. Select Employees & Payroll
3. Select Payroll Summary
4. Click on Customize Report within the upper left corner
5. On the Display tab, choose All Dates
6. Select Payee within the Display Columns by menu
7. ask of Row and uncheck Hours and Rate
8. Click on the Filters tab, select Accounts and choose the opposite Current Asset account used for the worker Advances on the menu
9. Click OK
Manage Employee Loans which will be Repaid over Time on Multiple Paychecks
1. Edit the worker
2. Change tabs to Payroll and Compensation Info
3. Under Additions, Deductions and Company Contributions select the Loan Repayment Payroll Item
4. Enter the quantity to be paid by paycheck within the Amount column as a negative amount.
5. Enter the balance remaining to be paid at now into the Limit column as a negative amount.
6. Click OK
Note: QuickBooks will automatically deduct this repayment on each paycheck and can stop the deduction once the limit has been reached.
QuickBooks now has on record a loan paid to the worker . If you've got defined payment terms with the worker , you would like to edit the employee’s record, in order that on future payroll checks the agreed-to amount are going to be deducted.