Salary advance

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Mike Scholl 20 years ago

I have just started doing my payroll in QB. I have one employee who has, in the past, had an advanve on his monthly salary in the middle of the month.

I thought the easiest thing was to put the first three months of the tax year into QB replacing my manual journal entries so QB has the correct YTD info.

I have done this and everything agrees. ie QB and my pencil produced the same tax/ni to within a penny or two.

However I treated the salary advances as a payroll deduction Name :Salary Advance Agency: blank Identifying number: blank Liability Account: Salaries owing Tax tracking: none Taxes: none Calc on quantity: neither Gross vs Net: gross Default rate and limit: all blank

This seems to work. I charged the advance cheque to salaries owing which therefore has a zero balance.

When I came to pay my tax liabilites however the total advances are showing as a liability to pay.

How do I set this liability off against the monies paid?

Mike

PS Hopefully I have now stopped this chap from getting advances so it's not going to be a regular thing.

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coyboy 20 years ago

The reason this doesn't work out right is because a 'liability' is something the 'company' owes. What you should do is make the loan to the employee using an addition item with tax tracking set to 'none' and linked to an asset account (maybe called Loan - employee X). This way, when you give the loan, the asset account will be increased and the loan amount will not be taxed. To recoup the money as a payroll deduction, create a deduction item with tax tracking set to none and linked to the same asset account. The deduction will reduce the asset account. This way, you can always check the asset accounts to see how much an employee owes you.

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coyboy 20 years ago

The reason this doesn't work out right is because a 'liability' is something the 'company' owes. What you should do is make the loan to the employee using an addition item with tax tracking set to 'none' and linked to an asset account (maybe called Loan - employee X). This way, when you give the loan, the asset account will be increased and the loan amount will not be taxed. To recoup the money as a payroll deduction, create a deduction item with tax tracking set to none and linked to the same asset account. The deduction will reduce the asset account. This way, you can always check the asset accounts to see how much an employee owes you.

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Allan Martin 20 years ago

The OP said the payroll detail was set at tax "none" and no payee was set up.

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coyboy 20 years ago

Absolutely correct, Allan but the OP also said they used a deduction item linked to a liability account which is the cause for their concern as this liability appears in the pay liabilities module.

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Allan Martin 20 years ago

I agree. I tried it out on a sample file and linking to a liability account will cause the problem even though no payee is designated and tax tracking is set to none.

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Salary advance

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