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Linzee
February 5, 2019
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How do I take a purchase out of an employees paycheck?

  • February 5, 2019
  • 2 replies
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How do I take an employee's purchase out of their paycheck?

Best answer by qbteachmt

@IamjuViel

 

Please Learn from this input.

 

@Linzee

 

The Wage Garnishment or Net Pay deduction is linked to an Other Current Asset account you name for Employee Advance. It's the same as an Employer Loan Repayment activity. There is even that named Payroll Deduction item if you use New Payroll Item, then the EZ setup.

 

The Sale is entered using a Customer Name version for the employee and using Invoice. You also need to set up an Other Charge Type Item and link it to that Other Current Asset account. Put this on a Credit Memo for the Customer Name version of the employee and Apply this to the Invoice. You just made a Paid Sale, paid by "they owe the employer."

 

The Paycheck Deduction flows to this same Other Current Asset account, to show What they owed has been paid from Net Pay Deduction.

 

@IamjuViel

 

Nothing here is Expense. It is in lieu of Funds; the Employee is the customer who did not Pay, yet.

2 replies

IamjuViel
IamjuViel
February 5, 2019

Glad to see Hello there, @Linzee.

 

I’m here to help walk you through record an expense transaction taken out from your employee’s paycheck.

 

To start with, when setting up the deduction item, its liability account should be posted under any “expense account”. It can also be posted to the expense account where you track the purchases made out of payroll. That way you can just pay the bill when it comes in. Then, the “net“ amount in the expenses account is the amount you have paid, or the item purchased, less the amounts recovered from Employee deductions. 

 

Here’s how:

  1. Create a deduction Payroll Item (Make sure the Tax Tracking is None).
    1. Click the Lists menu.
    2. Choose Payroll Item List.
    3. Select the Payroll Item drop-down button, then click New. 
    4. Choose Custom Setup, then click Next.
    5. Follow the on-screen instructions on the corresponding pages:
      • Payroll item type: Select Deduction.
      • Name used in paychecks and payroll reports: Enter a name for the deduction.
      • Agency for employee-paid liability: Leave the Agency Name and Agency Identification Number fields blank. Also, QuickBooks will Auto-fill the Liability account field for you.
      • Tax tracking type: Select None if this is a non-taxable deduction. If it is, then select the appropriate type.
      • Taxes: Just click Next.
      • Calculate based on quantity: If this isn’t based on quantity and hours, then choose Neither.
      • Gross vs. net: Select net pay to ensure that this won’t affect the gross wages that’ll appear on your forms.
      • Default rate and limit: You can leave the Rate and Limit fields blank.
    6. Click Finish.
  2. Add it to the Employee Record.
    1. Go to Employees.
    2. Choose Employee Center.
    3. Double-click on the employee’s name.
    4. Select Payroll Info tab.
    5. Go to the Additions, Deductions, and Company Contributions section.
    6. Enter the deduction under the Item Name column.
      Click OK.
  3. Enter the deduction amount.
  4. Include the deduction item in creating the employee’s paycheck.

If you need further assistance with the steps above, I’d recommend reaching out to our Customer Care Team. A specialist would be able to further help you via secured remote access session.

 

Here’s how to contact us:

  1. Go to: https://help.quickbooks.intuit.com/en_US/contact. 
  2. Choose your QuickBooks Product.
  3. Select Payroll.
  4. Choose your type of Payroll Subscription.
  5. Click Payroll.
  6. Click on the View Contact Info button to see the support number.

Please don’t hesitate to click the Reply button if you have other questions about managing your expense transactions. I’m always here to lend a hand.

qbteachmt
qbteachmtAnswer
February 6, 2019

@IamjuViel

 

Please Learn from this input.

 

@Linzee

 

The Wage Garnishment or Net Pay deduction is linked to an Other Current Asset account you name for Employee Advance. It's the same as an Employer Loan Repayment activity. There is even that named Payroll Deduction item if you use New Payroll Item, then the EZ setup.

 

The Sale is entered using a Customer Name version for the employee and using Invoice. You also need to set up an Other Charge Type Item and link it to that Other Current Asset account. Put this on a Credit Memo for the Customer Name version of the employee and Apply this to the Invoice. You just made a Paid Sale, paid by "they owe the employer."

 

The Paycheck Deduction flows to this same Other Current Asset account, to show What they owed has been paid from Net Pay Deduction.

 

@IamjuViel

 

Nothing here is Expense. It is in lieu of Funds; the Employee is the customer who did not Pay, yet.

    L
    LinzeeAuthor
    February 11, 2019

    Thank you for your help!

    W
    WCarriger
    December 22, 2022

    We do not use QB payroll yet.  We do however, enter our payroll journal entries into QB.

    Last pay period, we offered our staff an opportunity to purchase business apparel, and we could deduct the costs from their paycheck.  

    I'm looking for the best way to record this in quickbooks. 

    Does it need to be a separate sale in quickbooks or do I need to amend the journal entry that I made for payroll to include "misc income" and denote it as "staff shirts."

    J
    JamesAndrewM
    December 22, 2022

    Welcome to the Community, WCarriger.

     

    We can create both to correctly record the business apparel purchase and the cost deduction from the employee's paycheck. To include the details, we will need to create a sales invoice and a journal entry in our accounting system. We will use the same account for both transactions in this case.

     

    To create a sales invoice for the business apparel purchased by an employee in QuickBooks Desktop, follow these steps:

     

    1. From the Home page, click Customers, and then select Create Invoices.
    2. Choose the customer name from the Customer: Job drop-down menu. This should be the name of the employee who made the purchase.
    3. Enter the date of the purchase in the Date field, as well as the details of the items purchased in the Item column. This should include a description of the item, the quantity purchased, and the price.
    4. Enter the total amount due for the purchase in the Amount field.
    5. Click Save & Close.

     

    To create a journal entry to record the deduction of the costs from the employee's paycheck in QuickBooks Desktop, follow these steps:

     

    1. From the Home page, click Lists, and then select Chart of Accounts.
    2. In the Chart of Accounts window, click the Account drop-down menu and choose the account that you want to use for the deduction (e.g. Accounts Payable).
    3. Click the Edit button and then select Make Journal Entry from the drop-down menu.
    4. In the Make General Journal Entries window, enter the date of the deduction in the Date field.
    5. In the Debit column, enter the amount of the deduction and select the account that you want to debit (e.g. Accounts Payable).
    6. In the Credit column, enter the same amount and select the account that you want to credit (e.g. Employee Payroll Expense).
    7. In the Mem" field, enter a description of the deduction (e.g. Business apparel purchase).
    8. Click Save & Close.

     

    I recommend consulting with your accountant for guidance on how to ensure compliance with any relevant tax laws or regulations. 

     

    You can visit this article to know the specific ways to customize your reports: How to run and customize reports in QuickBooks Desktop.

     

    If you have any further concerns, don't hesitate to post them here. Have a great day!

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