How to replace a lost or stolen paycheck
How do I re-issue a lost or stolen paycheck without affecting my tax accumulations?
If the lost paycheck was issued in the current quarter, we recommend voiding the check and re-issuing it in its own new payroll process. Note: reissuing the paycheck will add additional personal time which must be removed. Simply bring up the Employee record, go into the Personal Tab, note the two entries for Personal Time (one on the original check date and one on the re-issued check date), click the red X to the left of the Personal Time on the replacement check date.
If the lost or stolen check was printed in a previous quarter, we recommend the following:
Following the steps outlined below will allay concerns about the effects that voiding payroll checks might have on tax accumulations and W-2/941 form data by resolving the issue entirely within the Ledgers & Payables module without touching tax liability accounts, employee records, or payroll processes.
This method involves four steps:
- Entering a Bill (in Ledger & Payables) for the Net Amount
- Printing the check to pay the Bill
- Voiding the check with a void date that is the same as the Ledger Check's date.
- Marking all three entries on the Bank Reconciliation (the original paycheck, the L&P Check, and the Journal Entry) when the new check clears the bank
Step 1: Enter a Bill for the NET pay amount
Enter a normal bill, observing the following details:
- Use the employee as the Vendor. If the employee doesn't have a vendor record, use the 'New Vendor' hyperlink to create one for them on-the-fly. They will need at least a name; and any address information desired on the check.
- Use the current date as the Invoice Date
- Use the employee's normal gross pay expense account as the Line Item
- Use the NET pay amount of the lost check as the Amount
- Enter a comment designating the bill's purpose to re-issue a lost paycheck (including the original paycheck number would be a nice cross reference)
Step 2: Create and Print a Check paying that bill
Create a check paying the bill created in Step 1. Do NOT change the check number to match the lost paycheck: this will be a new check with a new check number that will need to be accounted for separately in the check number sequence. Ensure the Check Date matches the Bill Date. Print the check and issue it to the employee.
Step 3: Create a Journal Entry reversing the L&P Check
You will now reverse this L&P check with a journal entry using the same date used for the the bill & check. You will Debit the Bank Account and Credit the Gross Pay Account you just used to create the bill/check.
Step 4: Mark the three transactions on the Bank Reconciliation when the time comes
When the new check clears the bank, mark all pertinent entries on the Bank Reconciliation: The original check, the new check, the reversing journal entry.
How will this process affect my books?
- Your W-2 accumulations remain untouched
- You have printed a new check for your employee to deposit in their bank
- Your books are balanced (the proper amounts are accounted for in the proper accounts), and
- Your bank reconciliation will reconcile. When the new check clears the bank, you can clear the lost paycheck as normal; additionally, clear the new check and the new check's reversing journal transaction (these two transactions will balance each other).