Pay Advances / Employee Loans

Pay Advances / Employee Loans

Pay Advance/Employee Loan

The following steps will guide you through setting up Cashbook for recording pay advances

Step 1: Create an Asset Account

  • Click the Chart toolbar icon
  • Click on the Assets tab
  • Click Add
 

Step 2: Create an Advances in Pay Account

This account will be used when you pay an advance on the employee's pay/wages

  • Click the Chart toolbar icon
  • Click on the Expenses tab
  • Click Add

  • Add details for new other expense account Advances in Pay (see below):
    • Account Type: Other Expense
    • GST Category: 10. Non-reportable Payments
    • Balance Sheet Link: 505 Payroll Advances
 

Step 3: Create an Advance Repayment Account

This account will be use to withhold the advance from the employee's future pay

  • Click the Chart toolbar icon
  • Click on the Income tab
  • Click Add

  • Add details for new other expense account Advances in Pay (see below):
    • Account Type: Other Income
    • GST Category: 11. Non-reportable Receipts
    • Balance Sheet Link: 505 Payroll Advances
 

Step 4: Create an Advance Repayment Deduction in Payroll

This deduction will be used to record the repayment of an advance in the employee's wages

  • Click the Payroll toolbar icon
  • Click on the Setup Lists tab
  • Click on the Deductions tab
  • Click Add

  • Enter as follows:
    • Name e.g. Advance Repayment
    • In the Optional Cashbook Account box:
    • Tick the Allocate to radio dial
    • Select Account e.g. 085 Advance Repayment
    • Click OK to save
 

Example Use

A shearer Daniel Brown does not get paid until the end of the week but he has asked his employer for an advance in his wages of $200.

Step 1: Recording an Advance in Pay

 
  • Click on the Cashbook icon
  • Click Add

  • Enter the payment transaction.
    • Type - Payment
    • Gross Amount - 200.00
    • Code - 175 Advances in Pay
 

Step 2: Deducting the Advance from a Wage Payment

  • Click on the Payroll icon
  • Double-click on the employee
 
iii. Click on the Add Pay button
iv. Make sure Pay For Period Ended and Date Paid is correct
v. Click on the Wages/Salary tab
vi. Enter pay information as you would normally. e.g number of hours, rate, allowances etc.
vii. Click OK
viii. Click on the Deductions tab

  • Fill in window as follows:
    • Deduction e.g. Advance Repayment
    • Amount e.g $200 (this is the amount of the advance you have paid your employee)
    • Note optional
    • Click OK to save
 
 




Article ID 4473