Thank you so much for a quick and detailed response!!
I followed your directions and managed to set that up.
Now much question is, how can I link it to the account that I used when I cut the check, is that even possible? As the employee pays back the loan each month, the Employee advance account I used should be deducted. Will I need to do that manually?
You can record the transaction you've paid for your employee by writing a check in QuickBooks Desktop. Then, use the Expense tab to enter the liability account you've created to track the item. This will help link those two entries.