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laurenmcginn
Level 1

Employee loan close out

I have QB desktop, I have a couple employees who had loans, but were deducted through our ADP payroll system. 

They are all paid off and need to close them out. They no longer owe any money. 

How do i go about closing them out?

 

 

4 Comments 4
Jovychris_A
Moderator

Employee loan close out

Hi there, @laurenmcginn.

 

You can create a deduction item for the employees' loan then make sure that the deduction account assigned is a liability account.

 

Let me show you how:

  1. In your QuickBooks Desktop, go to the Lists menu, then select Payroll Item List
  2. Click the Payroll Item button and then New.
  3. Select EZ Setup, then click Next.
  4. Choose Other Deductions, then Next.
  5. Then check the boxes that will apply then click Finish.
  6. Set up the payment schedule for the deduction and then hit Next.
  7. Click Finish.

 

To edit the payroll item, you can go to the Lists menu, then select the item under Payroll Item List.

 

To close out the loan, you can use journal entry. However, I recommend consulting your accountant for guidance with the posting accounts.

 

You may follow the steps on how to create a journal entry.

  1. Select + New.
  2. Select Journal entry. Or, if you're in Business view, switch to Accountant view first. Then come back to these steps.
  3. Fill out the fields to create your journal entry.
  4. Select Save and close.

 

I'll add this article as your reference on how to set up loan accounts and manually track them in QuickBooks Desktop: Manually track loans in QuickBooks Desktop.

 

Feel free to visit our QuickBooks Live Bookkeeping to get a dedicated expert to guarantee all your records in QuickBooks are accurate and up to date.

 

Feel free to tag me if you have additional questions. I'm here anytime you need help. Take care!

laurenmcginn
Level 1

Employee loan close out

They are not under payroll though.... They are just classified as employee loans. The loans were taken out of our separate payroll system, That is not attached to QB in any way... Please let me know how to close them out from here with that all being said?

gorejs
Level 3

Employee loan close out

I have this same question. Did anyone ever answer you?

 

JoesemM
Moderator

Employee loan close out

Hello, @gorejs. I appreciate you participating in the discussion, and I'd be happy to assist you in closing out the loan to your employee in QuickBooks Desktop. This enables you to keep track of the loan balance and record payments. 

 

In QuickBooks Desktop, there are two ways to close off an employee loan. Before doing any process make sure that you'll still remember the liability accounts created when setting up the loan.

 

To start, you can write a check for the affected loan account and do a bank deposit for the repayment. Then, make sure to use the correct account to ensure the accuracy of your data. 

 

Here's how:

 

  1. Go to the Banking menu, then select Write Checks.
  2. Select the Bank Account you want to use to pay the loan.
  3. Enter the necessary details.
  4. Select Save & Close.

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Then, create a bank deposit for the loan repayment. To do so, follow the steps below:

 

  1. Go to the Banking menu, then select Make Deposits.
  2. If the Payments to Deposit window opens, select Cancel.
  3. Input the necessary details.
  4. In the Amount column, enter the loan amount.
  5. Select Save & Close.

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On the other hand, you can create a journal entry to record the loan amount. However, I'd suggest consulting your accountant for the accounts you'll use. They can give you advice on how to properly record this to ensure the accuracy of your books.

 

To enter a journal entry:

 

  1. Go to the Company menu, then select Make General Journal Entries.
  2. Enter the Date and journal Entry Number.
  3. The first line of credit the bank account.
  4. Select the second line and debit the liability account.
  5. Select Save.

User-added image

Then, do the repayment. You may follow the steps above for the first line to credit the liability account, and in the second line debit the bank account. For more details about the process, follow this article: Manually track loans in QuickBooks Desktop.

 

Additionally, check out these articles below to track your loan with the help of Loan Manager and other related topics: 

 

 

Drop me a comment if you have more questions about employee loan payments. I'll be sure to help you some more. Take care always.

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