How to deduct employee personal expenses from payroll

fl3tty · ‎June 26, 2019

Hi all,

So I've searched the threads for information on this, but they don't seem to cover every step involved with setting a new deduction up, and I would like to ensure I've completed this correctly.

The situation is this - the employee has made personal purchases on the company credit card, and we would like to deduct these off his pay.

So far I have created a new deduction called "Employee Purchases" under Payroll Settings > Deduction Categories and made this a post-tax deduction so that it doesnt affect the tax calculation. However, I've noticed that when creating the deduction it doesn't make you link the deduction to a particular account - I only found this option later under Payroll Settings > Chart of Accounts, and have noticed that none of the standard deduction categories (e.g. Pre-Tax Deduction, Post-Tax Deduction, Salary Sacrifice Super) are not linked to anything.

So my questions are:

1. Are you required to have the deduction categories linked to an account? Or does it not matter? Where are the deductions recorded to if you don't specify a linked account?

2. Do you need to specify both a liability account and expense account, or just choose one? What are the affects of each?

3. In the situation above, the Employee has already made the purchases on the credit card, which would presumably be coded to an Other Asset account that I will name "Employee Purchases", as the Employee owes the money back... I would have assumed that the deduction category should then also be linked to this Asset account, so it balances out the other entry... But we are only provided with the options of linking a deduction category to either a Liability or Expense. What is the correct way to deal with this?

On another note, I will also be setting up a deduction category for Uniforms that are being deducted from employees pay. Should I simply just link this deduction category to a Uniform Expense account?

Thanks in advance!

Intuit Zac · ‎July 01, 2019

Hi Fl3tty, Thank you for getting back to us on this. You might need to "Import" the account into your Payroll Session so you can see it in the drop down. Here is how:

Importing Accounts

https://support.yourpayroll.com.au/hc/en-au/articles/204952924-Importing-Accounts

Please take a look and let us know if you have any other questions.

View solution in original post

Anonymous · ‎June 26, 2019

Hello, fl3tty.

It’s necessary to have an account link to a deduction category so you’ll be able to match the amounts. Since you’re only able to select liability and expense account, you can instead link the deduction category to a liability account.

Also, you’ll need to use the liability account when recording the employee’s expense so the amount will offset (Instead of linking to Other Asset account).

For additional information about setting up deductions, please refer to this article: https://support.yourpayroll.com.au/hc/en-au/articles/200012219-Setting-up-Deductions
You might also reach out the KeyPay support team for further assistance.

Drop by again if you have other questions about QuickBooks.

fl3tty · ‎June 27, 2019

Hi MikiD,

Thank you for the reply and the link, however, I've looked into this link prior to posting this query, and it actually doesn't answer any of my questions, and doesn't seem to touch on the topic of linking liability / expense accounts at all.

Thank you for the advice - I will set up a liability account to link to, rather than an asset account.

Are you also able to assist with my second question - 2. Do you need to specify both a liability account and expense account, or just choose one?

Cheers!

fl3tty · ‎June 27, 2019

Hi MikiD,

Further to my question... I've just created a new current liability account - classification as "payroll clearing", however the account is still not appearing in the drop down menu for selection as a deduction category linking account? How do I link the accounts when its not appearing?

Cheers,

Anonymous · ‎June 27, 2019

Hi there, fl3tty.

You might want to track the funds deducted from your employees for their uniforms in a liability account. This is because the funds collected are the company’s obligations to forward to the vendor (the one who provide the uniforms).

I also have here an article that might help your first set of questions: https://support.yourpayroll.com.au/hc/en-au/articles/204952914-Mapping-GL-Accounts

We’re just a post and a comment away if you need anything else.

fl3tty · ‎July 01, 2019

Hi MikiD, Thanks again for the reply, and for the explanation :) but you missed my second question - - I've just created a new current liability account - classification as "payroll clearing", however the account is still not appearing in the drop down menu for selection as a deduction category linking account? How do I link the accounts when its not appearing? Cheers! Amanda

Intuit Zac · ‎July 01, 2019

Hi Fl3tty, Thank you for getting back to us on this. You might need to "Import" the account into your Payroll Session so you can see it in the drop down. Here is how:

Importing Accounts

https://support.yourpayroll.com.au/hc/en-au/articles/204952924-Importing-Accounts

Please take a look and let us know if you have any other questions.

fl3tty · ‎October 29, 2019

Thank you!

That was exactly the step I was missing! I never saw that Import Accounts button at the top right.

Cheers!

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How to deduct employee personal expenses from payroll