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LeahF
June 17, 2020
Question

Payroll forgivable loan

  • June 17, 2020
  • 1 reply
  • 0 views

Hello,

 

I am needing to figure out how to setup the following scenario:

 

Employer provided forgivable loan to employees, with only the taxable portion to be repaid.

 

I wrote cheques for the loans to the employees, and put the offset account to an "other receivable" account.

 

I need to show the loan repaid amount in payroll so they can see how much they have repaid of the loan.  I need to reduce the receivable account to wages for the expense so the employer reflects their accurate wages paid.

 

I have setup a Company Contribution for the repayment, which calculates the taxes correctly, but if I allocated it to the Receivable, it is increasing it.

 

I know I'm missing the offset, but where do I do this, without it impacting the paycheques?


Any help is greatly appreciated!


Leah

1 reply

L
LauraAB
June 17, 2020

Hello LeahF,

 

Welcome to the QuickBooks Community. I can see how figuring out how to record this kind of transaction in QuickBooks Desktop could be a bit tricky since you're looking for specific accounts to be reduced based on input from elsewhere in the program. I'll point you in the right direction for getting this sorted out.

 

To get you started, I want to make sure you have the right payroll item set up for your needs. It sounds to me like it's the employees that are going to be repaying the employer for the loan they received. If that's the case, you'll want to consider a Deduction item rather than a Company Contribution. A Company Contribution is a portion paid by the employer to a specific vendor or for a specific circumstance. Typically, it's used for company-paid benefits. To have an item that's reducing the employee's pay cheque in form of repayment, a Deduction will do the trick.

 

There's a helpful article in the in-product QuickBooks Desktop Help section that goes over different payroll item types. Feel free to check it out to make sure you have the setup you need. Here's how you can find it.

  1. Select Help from the top QuickBooks menu.
  2. Choose QuickBooks Desktop Help.
  3. On the Have a Question? window, click the Help tab.
  4. Click the Search button.
  5. Enter payroll item and hit Enter on your keyboard to search.
  6. Click the Set up a common payroll item article.

When it comes to the funds deducted from pay cheques, it will add the amount to whatever account it's being allocated to. This is where it would be great to have an accountant step in, especially an accountant that is familiar with QuickBooks Desktop. Figuring out how to balance out the funds against one another is going to take some accounting knowledge and practices since there isn't a built-in feature for what you're looking to do.

 

If you don't already have an accountant, you can connect with one using our Find an Accountant database. When you search, you'll be given a list of QuickBooks-certified accountants near you. Feel free to use the filter options to narrow down your search.

 

If you already have an accountant you're working with and they also have QuickBooks Desktop, consider sending them an Accountant's Copy of your company file for them to work on.

 

Wishing you the best with this situation!

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