How to record an Advance Paycheck or Loan to Employee
This article covers the following:
- Write an AP check to the employee for the requested amount
- In Payroll, create a deduct code that is after tax and has a ceiling of the loan amount
- Set it to deduct a fixed amount each month until loan is paid.
- Write an AP check with the employee as vendor
- Create a deduct code in File, Preferences, Payroll, Earn/Deduct Codes, that is after tax and has a ceiling of the loan amount
Add the deduct code into this employee by clicking on ‘Add’ at the bottom
The above screen will display. Enter in the Amount you want taken out of each paycheck and the maximum amount. It will take out the 50.00 every time to the Max Amount of 2640 (the amount of the loan). The GL Acct number is the one you used when you wrote the AP check. Then it debited Expense, now it will credit expense and debit the checking account.
Here is an example of the loan check:
Here is an example of the paycheck with the loan amount being deducted. It is a print-preview of a payroll check which always has the word Void stamped across.