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A
alect
July 22, 2020
Question

How do I record a payroll advance to an employee?

  • July 22, 2020
  • 1 reply
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    1 reply

    K
    Kass_B - Product Champion
    July 22, 2020

    Hi alect,

     

    If you are paying your employee an amount in advance, you can set up a Pay Category specifically to record the amount in the pay run. Depending on the nature of the payment, you can then pay this as a Lump Sum amount to aggregate the tax over as many pay periods as you require. This can be used when processing any additional payments (regardless of the financial year the additional payment applies to) and can include all back payments, commissions, bonuses and so on. To set up the category:

     

    1. Select the Employees tab, then Payroll Settings.
    2. Select Pay Categories (under the Pay Run Settings subheading).
    3. Select Add (top right) and name the category, eg Pay Advance, then Save.
    4. Enter in the category setup as required, then select Save. 

     

    Now you can apply the category in a pay run:

     

    1. Open the pay run, or select New Pay Run and create a new one.
    2. Use the Pay Run Actions to add the employee if they are not already showing. Then click on their name to expand the information, and select their Actions button and click Add Lump Sum Payment to create the earnings line.
    3. Select the pay category and add a note as required. Enter the hours or units and the amount. Select Method A and enter the amount of pay periods the tax will be aggregated over. Then Save and Finalise the pay run. 

     

    There is no specific or preferred method of entering a pay advance in the pay run; if you do not need to aggregate the tax, you can instead select Add Earnings instead of Add Lump Sum Payment, and enter the pay category and units/amounts as required. 

     

    -Kass

    A
    alectAuthor
    July 22, 2020

    Thanks - I actually figured out the deduction in payruns etc from the equivalent on the USA QBO community.

     

    The outstanding questions I have are:

    • how do i record the cash payment (out of cycle of payruns) transaction from the bank account?
    • how do I connect/reconcile that cash payment transaction to the deduction in the next payrun for the employee?
    K
    Kass_B - Product Champion
    July 22, 2020

    Hi alect,

     

    When you finalise the pay run in which you have recorded this advance, it will automatically create a journal to QuickBooks Online. If you haven't selected a specific account in QuickBooks Online for the pay advance category to journal to, it will be included in the default wages expenses journal to your default payment account. This is usually the Payroll Clearing account; you can double check this by going to Payroll Settings, then Chart of Accounts and clicking on Default Accounts to see what payment account you have set up. When the amount you have paid to the employee comes through your bank feed, you can then categorise the payment to this account like you would for a regular pay run. 

     

    I am not sure what you are referring to in your second question, or specifically the 'deductions' side of it - are you deducting the amount from the employee's wages at a later date? If that's the case, the amount you pay the employee will match the amount recorded in the pay run - that is, their regular wages less this pay advance, and you would categorise this just like a regular pay run.

     

    -Kass

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