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What’s the best/correct method of recording a cash advance to an employee using QuickBooks Online?


QB Issue Resolution:

You are very much on the right track. You should record the original advance by using a Cheque and the asset account would be “Employee Advances”. I’m just going to post the steps below for you:

Employee advance:

– Click on the plus sign and create a cheque expense -> choose bank for it to come from; date of the cash payroll advance; Pay to the Order of the employee; Memo -> advance against payroll (could put period and dates); itemize by account-> create a new account (current asset -> Employee Cash Advances) and enter in the amount (no sales tax); copy memo into description (shows on different reports)

– Go to the employee in payroll you gave the advance to -> edit employee and go to contribution and deductions (number 5)-> add a deduction -> call the deduction “Advance Repayment”; can do it by $ amount per period (enter in the amount of the advance, i.e, whatever the employee is paying back to the company (will be deducted from their pay)

– Go to Payroll settings, then Accounting Preferences and under Other Liability & Asset Accounts change the Cash Advance Repayment account to “Employee Cash Advances” (the current asset account you created in the chart of accounts)

– Go to Payday -> Run payroll and Pay the employee

Hope this helps!

Resolution for Issue 'What’s the best/correct method of recording a cash advance to an employee using QuickBooks Online?' available: Yes (Solved).
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What’s the best/correct method of recording a cash advance to an employee using QuickBooks Online?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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Employee Advance

You don't have to do it manually, Kat5516. You can easily link the account to the payroll item.

 

You'll have to edit the payroll item and change the liability account to the one you've selected in the check. Then, once you create a paycheck, the balance will be deducted. 

 

You can open the link I've added at the top on how to edit the payroll item and change the account.

 

 

Once done, when you create a paycheck, the amount will be deducted. You'll have to open a quick report to verify it. Here's how:

  1. Click Lists.
  2. Go to Chart of Accounts.
  3. Select the employee advance account, right-click, then select QuickReport.

 

Get back to this thread if you have more questions. I'm just around to help you. 

Sours: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/employee-advance/00/648933
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How do I record a payroll advance to an employee?

Hi alect,

 

That's correct - the advance recorded in the pay run will journal to your Payroll Clearing account and balance against the bank transaction. As an example:

 

You record an advance of $50 on a pay run and transfer this from yours to your employee's bank account. The $50 will be recorded as paid to the employee in the pay run, journal to the selected account (in your case the Payroll Clearing) and increase the balance (as it's a liability account). The bank transaction itself, once categorised to the Payroll Clearing account, will then offset that amount by decreasing the balance.

 

Similarly, if you were to deduct the amount from the employee's wages in the future (let's say they earn $150 and you deduct the $50, making your total payment to them $100), when you record this in the pay run the $100 will journal to Payroll Clearing, and your bank transaction will offset this amount as well. 

 

 

-Kass

Sours: https://quickbooks.intuit.com/learn-support/en-au/payroll-and-stp/how-do-i-record-a-payroll-advance-to-an-employee/00/626719
Setup and Run Payroll in QuickBooks Desktop (Pro, Premier, and/or Enterprise)

How To Record Employee Advances In QuickBooks Online

As a business owner, there will be times when you’ll need to give an employee a cash advance. This could be for one of two reasons: you purchased something for an employee with the agreement they will pay you back, or you’re giving an employee an advance on their check. Let’s go over how to do record these in QuickBooks Online. First, you’ll want to create an Employee Advance account (unless you already have one). If you often give out employee advances, creating sub-accounts would be helpful, using the employee’s name. 

To Set-Up Employee Advances Account

When you’re in the Accounting tab of QB, click “New” and the Account template will pop-up, which you’ll set up accordingly:

Category Type → Other Current Assets

Detail Type → Employee Cash Advances

Name → Employee Advance

If you paid for something for an employee’s personal use, with the agreement that the employee would pay you back, you’ll need to start by recording it as an Expense. Under “account,” you’ll need to select “Employee Advance” using the drop-down arrow. Include a memo with the employee’s name, stating it was a personal purchase/loan. 

When the employee pays you back, you will list this as a Deposit. Select who you received the money from and choose the “Employee Advance” account. Under description, it would be helpful to say this is a repayment of the advance. 

If an employee asks for a cash advance on their paycheck, you’ll select “Check” and then choose the “Employee Advance” account. Write a memo with the employee’s name, stating this is an advance on their next paycheck. 

To see all of this done within the QuickBooks app, watch our Tutorial. The video goes on to explain how you would deduct advances from paychecks and what all of this activity looks like within your Employee Advance account. If you have any questions, you can always contact us!

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Advance quickbooks payroll

Create an employee advance

Learn how to create an employee advance in QuickBooks.

Do you need to give an employee an advance on their paycheck? We explain how to manage all aspects of this loan.

Pay an advance on a regular check

In QuickBooks Desktop we call paying an advance on a regular paycheck Write Check.
The following steps show you how to create a regular (non-paycheck) check for an advance. And how to set up a deduction to pay the advance back on a regular payroll paycheck.

Step 1:  Create a regular (non-paycheck) check for an advance.

  1. From the QuickBooks Desktop Banking menu, select Write Check.
  2. Select the bank account from the Bank Account drop-down list.
  3. Select the date for the check.
  4. Select the employee from the Pay to the Order of drop-down list, and click OK in the warning screen.
    Note: The advance check is a regular check and will not affect payroll taxes.
  5. Enter the dollar amount of the advance below the check date.
  6. Select the account from the Expense tab Account drop-down list.(Note: The account for this should be the same as the account that will be used to pay back the advance so that the accounting portion of it is correct and is usually an asset account or other current asset account).
    Optional: Select the class from the Expense tab Class drop-down list if you want the check to affect a class.
  7. Check the Print Later box next to the Print icon.
  8. Click Save & Close.

Step 2: Print the check

  1. From the File>menu, select Print Forms, and click Checks.
    Note: If the check does not appear in the Select Checks to Print window, make sure the customer has the correct bank account selected in the Bank Account drop-down list, and make sure the customer checked the Print Later box next to the Print icon.
  2. Edit the First Check Number if necessary.
  3. Make sure the check has a checkmark in the far left column, and click OK.
  4. Make any necessary printer changes, and click Print.

Step 3: Set up a deduction payroll item to pay back the advance

  1. From the QuickBooks Desktop menu, select Lists, then Payroll Item List.
  2. Select the Payroll Item button, and click New.
  3. Select Custom Setup, and click Next.
  4. Select Deduction, and click Next.
  5. Enter the name of the payroll item that will be easily identifiable (such as Advance Payback), and click Next.
  6. Leave the first two fields blank, select the account which will be affected by this payroll item in the Liability account drop-down list (Note: The account for this should be the same as the account that was used to give the advance so that the accounting portion of it is correct and is usually an asset account or other current asset account), and click Next.
  7. Make sure None is selected in the Tax Tracking Type window. (This payroll item will not affect taxes as it is being deducted from the net pay.) Select Next.
  8. Leave the taxes unchecked, select Next.
  9. Select Neither in the Calculate based on quantity screen, select Next.
  10. Select Net pay, and select Next.
  11. Select Finish.

Note: You should only enter a default rate and limit if the rate and limit will apply to everyone using the item. Otherwise, you should enter the rate and limit in the employee's profile.

Step 4: Create a paycheck with the cash advance repayment

  1. From the Employees menu, select Pay Employees.
  2. Select the employee and click Open Paycheck Details.
  3. In the Preview Paycheck make sure you are paying the employee for the full pay period, in which the cash advance was taken.
  4. Go to the second column on the left, Other payroll item. Under payroll item use the drop-down arrow to select Cash Advance Repayment.
  5. Enter the dollar amount from the cash advance in the Rate column. Your employee should either have a 0 check, or it should be smaller then normal in the net amount. (You can't issue an employee a negative check.) You may need to adjust the employee's FIT and or SIT. If you still have a negative check, you may have to take this out on another check.

Easy Set Up: Set up and pay an advance

Easy Set Up in QuickBooks Desktop will create two payroll items: Cash Advance and Cash Advance Repayment.

  • To create Advance payroll items in Easy Set Up
    1. From the QuickBooks Desktop menus at the top, click  Lists then Payroll Item List.
    2. At the lower left of the Payroll Item List, click Payroll Item then New .
    3. Select EZ Setup , and click Next.
    4. Select Other Addition for the item type, and click Next .
    5. Follow the on-screen set-up, which will ask you a series of questions based on the item type. (On the right side of each screen there are help topics that can assist you with the setup.) When you click Finish , the Payroll Setup window closes, and a blank screen is displayed in QuickBooks Desktop.
  • To create a paycheck with the Cash Advance addition item.
    1. From the Employees menu, select Pay Employees.
    2. Select the employee and click Open Paycheck Details .
    3. In the Preview Paycheck make sure you are paying the employee for the full pay period.
    4. Go to the second column on the left, other payroll item . Click under payroll item and use the drop down arrow to select Cash Advance .
    5. Enter the dollar amount from the cash advance in the Rate column.
    6. Continue creating paychecks.
  • To create a paycheck with the cash advance repayment.
    1. From the QuickBooks Desktop menus at the top, click Employees then Pay Employees.
    2. Select the employee, and click Open Paycheck Details .
    3. In the Preview Paycheck make sure you are paying the employee for the full pay period, in which the cash advance was taken.
    4. Go to the second column on the left, other payroll item. Click under payroll item and use the drop down arrow to select Cash Advance Repayment.
    5. Enter the dollar amount from the cash advance in the Rate column. Your employee should either have a 0 check, or it should be smaller than normal in the net amount (you can never issue an employee a negative check). You may need to adjust the employee's FIT and or SIT. If you still have a negative check, you may have to take this out on another check(s).

Things to consider

If an employee is unable to pay back to the advance on one paycheck, you can use QuickBooks Desktop reports to track the outstanding advance/loan balance.

Create a report to track employee loan balances.

  1. Create a custom Payroll Summary Report.
  2. Select Reports on the top menu bar
  3. Select Employees and Payroll.
  4. Select Payroll Summary Report.
  5. Select Customize Report in the upper left corner.
  6. On the Display tab, choose All Dates.
  7. Select Payee in the Display columns by drop-down menu.
  8. Check % of Row.
  9. Select the Filter tab.
  10. Select Accounts, and select the asset account used for the Employee Loans on the drop-down menu.

Add or change the employee advance limit

You can add or change the employee advance limit that will be re-paid over time and on multiple pay checks.

  1. Edit the employee.
  2. Change tabs to the Payroll and Compensation info.
  3. Under Other Payroll Items, select the employee advance repayment payroll item.
  4. Enter the amount to be paid by paycheck in the Amount column.
  5. Enter the balance remaining to be paid at this point into the Limit column.
  6. Increase the amount in the Limit column if there are any new loans or advances given to the employee. QuickBooks Desktop then automatically deducts this repayment on each paycheck, so the payroll administrator should not worry about forgetting it, and QuickBooks Desktop will stop the deduction once the limit has been reached.

This same method can be used for tracking Uniform allowances or purchases, etc.

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Sours: https://quickbooks.intuit.com/learn-support/en-us/regular-payroll/create-an-employee-advance/00/675206
Setup and Run Payroll in QuickBooks Desktop (Pro, Premier, and/or Enterprise)

How can I pay an employee advance by direct deposit?

Yes, it can be done through direct deposit (DD), Arian.

 

You can pay your employee in advance through DD by running an unscheduled payroll and ensure you set them up for DD to achieve this. Let me show you.

 

  1. Go to the Payroll menu in your QuickBooks Online (QBO), then select Employees.
  2. Select Run payroll.
  3. Find the employee you want to pay, and then select Create another check.
  4. Enter employee compensation, including any salary adjustments, vacation or sick hours, and other pay types.
  5. Confirm the pay period and check date.
  6. Select Preview Payroll, and then select Submit payroll.
  7. Then click Finish payroll.

 

You can also read through this link for more details: Create Unscheduled Payroll Check.

 

Also, as shared by my colleague above, taxes will be withheld automatically when processing them. If you don't want to be withheld, you can create a check to pay your employee in advance. You can refer to the steps above to be guided through the process.

 

Once you're all set, you'll want to check out these links for reference in case you need to print your check and how to file your payroll taxes flawlessly:

 

 

Do you need more help paying your employee in advance? Let me know in your reply. I'd be delighted to assist you with it. Have a dazzling day ahead 

Sours: https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/how-can-i-pay-an-employee-advance-by-direct-deposit/00/770114

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How to Record Employee Advances in QuickBooks®  

 

Greetings! 

If your company has a policy that allows you to give your employees advances on upcoming payroll, you can use QuickBooks® and QuickBooks® Payroll to record the advance, which can then be reimbursed to the company through payroll deductions. We recommend that you document any loans to employees with terms for repayment clearly spelled out and signed by both parties.

 

Note: This QuickBooks® tip assumes that you have an active QuickBooks® payroll subscription.

 

First, create an Asset Account to Track the Employee Loan and Repayment

This is a one-time setup task
  • Go to the Lists menu and click Chart of Accounts
  • Click Account at the bottom of the list and then click New
  • Under Other Account Types choose Other Current Asset and then click Continue
  • If you are using account numbers, enter the number in the Numbers field
  • In the Account Name field, enter Employee Advances
  • Click Save & Close
Next, you can either write a regular check (non-payroll) to the Employee for the Advance and post it to the Other Current Asset account Employee Advances or you can pay the Advance through Payroll in which case you will need to create a Payroll Item of the type "addition".
This is a one-time setup task.
  • Go to the Lists menu and click Payroll Item List
  • Click Payroll Item at the bottom of the list and then click New
  • Select the Custom Setup method and click Next
  • Choose Addition and click Next
  • Enter the name for this addition as Employee Loan
  • Click Next
  • On the Expense Account screen, choose the Other Current Asset account, Employee Advances, that you created in Step 1 for tracking this expense and click Next
  • Select None as the tax tracking type
  • Leave the taxes unchecked and click Next
  • Select Neither in the calculate based on quantity screen and click Next
  • Select Net Pay and click Next
  • Leave the default rate and limit blank and click Finish

Use this addition on the Employee's paycheck under Other Payroll Items. Enter this amount as a positive number. 

 

Then, create another Payroll Item of the type "deduction" 

Again, this is a one-time setup task.

  • Go to the Lists menu and click Payroll Item List
  • Click Payroll Item at the bottom of the list and then click New
  • Select the Custom Setup method and click Next
  • Choose Deduction and click Next
  • Enter the name for this deduction as Loan Repayment and click Next
  • Leave the first two fields blank, then under the Liability account field, choose the Other Current Asset account, Employee Advances, that you created in Step 1 for tracking this expense and click Next
  • Select None as the tax tracking type and click Next
  • Leave the taxes unchecked and click Next
  • Select Neither in the calculate based on quantity screen and click Next
  • Select Net Pay and click Next
  • Enter a default rate and limit if desired and then click Finish

Note: You should only enter a default rate and limit if the rate and limit will apply to everyone using the Payroll Item. The limit may be marked as an annual limit and if so, you will need to manually adjust or remove the amount at the beginning of the calendar year or it will start recalculating.

 

Use this deduction on the Employee's paycheck under Other Payroll Items. Enter this amount as a negative number. 

 

Create a Custom Summary Payroll Report to Track Employee Loan Balances
  • Go to Reports
  • Select Employees & Payroll
  • Select Payroll Summary
  • Click on Customize Report in the upper left corner
  • On the Display tab, choose All Dates
  • Select Payee in the Display Columns by drop-down menu
  • Check % of Row and uncheck Hours and Rate
  • Click on the Filters tab, select Accounts and choose the Other Current Asset account used for the Employee Advances on the drop-down menu
  • Click OK 
Manage Employee Loans that will be Repaid over Time on Multiple Paychecks
  • Edit the Employee
  • Change tabs to Payroll and Compensation Info
  • Under Additions, Deductions and Company Contributions select the Loan Repayment Payroll Item
  • Enter the amount to be paid by paycheck in the Amount column as a negative amount. 
  • Enter the balance remaining to be paid at this point into the Limit column as a negative amount.  
  • Click OK 

Note: QuickBooks® will automatically deduct this repayment on each paycheck and will stop the deduction once the limit has been reached.

 


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