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Level 2

employee purchase from business

I am selling an employee a set of tires that the business owns.  How do I set up a payroll deduction for this?

2 Comments 2
QuickBooks Team

employee purchase from business

Hi there, KeithM.


It's a pleasure to have you here in the Community. I'm here to help you set up the payroll deduction for this employee.


The following steps will guide you through the step-by-step process to create this payroll item:

  1. From the Lists menu, select Payroll Item List.
  2. Click the Payroll Item drop-down button, then choose New. You could also press CTRL + N.
  3. Select Custom Setup, then click Next.
  4. Follow the on-screen instructions on the corresponding pages:
    - Payroll item type: Select Deduction.
    - Name used in paychecks and payroll reports: Enter a name for the deduction.
    - Agency for employee-paid liability: Leave the Agency Name and Agency Identification Number fields blank. Also, QuickBooks will auto-fill the Liability account field for you.
    - Tax tracking type: Make sure to select None if this is a non-taxable deduction. If it is, then select the appropriate type.
    - Taxes: Just click Next.
    - Calculate based on quantity: If this isn't based on quantity and hours, then choose Neither.
    - Gross vs. net: Select net pay to ensure that this won't affect the gross wages that'll appear on your forms.
    - Default rate and limit: You can leave the Rate and Limit fields blank.
  5. Click Finish.

From there, you'll need to add this item to the employee's payroll information. Let me walk you through the steps on how to do this:

  1. From the Employees menu, select Employee Center.
  2. Double-click the employee's name.
  3. Go to the Payroll Info tab.
  4. In the Additions, Deductions, and Company Contributions section, enter the deduction under the Item Name column.
  5. Click OK.

That's it! For additional insight about this, I recommend following this article: Set up payroll item


However, before you go, if you also want to create an invoice for the employee then apply this deduction to it I recently answered a similar question. You may find it helpful. The link below will lead you to my answer:


Please feel free to get in touch with me here for any additional questions, I always has your back. Thanks for dropping in and have a wonderful rest of your week.

Lynn S1
Level 1

employee purchase from business

I did all the steps to record an employee purchase deduction and it worked great!  The one problem I have is that the payroll liability still shows on my pay liabilities screen.  How do I zero that out?

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