How do I enter the draw an employee took on their paycheck mid-month?

THANKS! You are correct, I actually finally found the correct specific steps in the HELP link! For anyone who stumbles across this post and needs the same help as myself, the QB article is titled: "Create an Employee Advance".  :)

I got the Mid Month Advance all set up following the QB help article but now how to I pay it out? And there was some not of making a journal entry to correct for it. DO I need to do this every month?

Hi there, @Gordeee.

In QuickBooks, after creating the item, it will automatically show once you do a paycheck. Then, you can add the amount on it. Once done, you can perform the following to assign the cash advance repayment deduction to your employees. Here's how:

QuickBooks Online: 

1. Go to the Workers or Payroll menu, then select Employees.
2. Select the employee's name.
3. Click the Edit icon in the Pay section.
4. Tick Add a new deduction and select the cash advance deduction you created above.
5. Choose either $ Amount or % of Gross Pay.
6. Enter the amount or percentage.
7. Add the annual maximum amount (optional).
8. Select OK.
9. Hit the Done button.

QuickBooks Desktop:

1. Click Lists, then go to Payroll Item List.
2. Tick Payroll Item, then select New.
3. Select Custom Setup, then click Next.
4. Choose Deduction, then click Next.
5. Enter a desired name, then click Next.
6. Select the liability account, then click Next.
7. Click the Tax tracking type, then click Next until you're in the Calculate based on quantity window.
8. Choose Neither, then click Next.
9. Select whether to calculate on gross pay or net pay, then click Next.
10. Enter a default rate or limit, then click Finish.

Also, are you creating this transaction every month? Since it will depend if you're deducting it to your employee paycheck every month.

You might want to use this article in case you need help setting up and assign pay schedules to pay your employees: Set up and manage payroll schedules.

Please know that I'm always around here in the Community to help. Take care, and have a great day!

I have payroll set to run monthly with direct deposit and I can enter the deduction that I set up as the mid month draw. 

I would like to pay a $1000 mid month draw (so I don’t need to calculate time sheets twice a month).  The only way I can see to do this is to write the employee a paper cheque for $1000 on the 15th? 

How do I send it through direct deposit?

How do I pay the mid month draw through direct deposit?  

Welcome back to the Community, @Gordeee.

You can run an Unscheduled payroll for your employee to send the payment through Direct Deposit. I'd be glad to help you get back on track in no time. Here's how:

1. Go to the Employees menu and select the Employee Center.
2. Select the Pay employees tab and click the Start Unscheduled Payroll button.
3. Double-check the Pay period end date and Check date field.
4. In the Check options section, mark the Print Paychecks on print stock.
5. Put a checkmark on the employee's name you wanted to pay.
6. Select the Open paycheck detail located below the Check options section.
7. Delete the hours in the Earnings section.
8. In the Other Payroll Items section, add a payroll item that is particular to the payment.
9. Enter the $1000 under the Rate column and select Save and close. Note: There should not have taxes calculated since this is a pre-tax item.
10. Click the Continue button after you've been route back to the inter payroll screen.
11. Make sure that there is no amount in the contributions, taxes, or other deductions. After that, select Create Paychecks.
12. Choose the button to submit it through Direct Deposit.

Once you're done, you can check out this article to learn more about how Direct Deposit works in QuickBooks: Direct Deposit service agreement.

In case you want to track your employee's payroll details, you can run a specific report for it. Please check out this article to see the detailed steps: Create a payroll summary report.

I'll be here if you need further assistance or questions. I'd be happy to lend a helping hand. Take care and have a beautiful day ahead.

That’s nice but I don’t see those options. 

I’m  using QuickBooks online. In the Payroll section the only options I see are Run Payroll or Bonus Only.

Do I need to turn it on somewhere?

Hi, Gordeee!

Yeah, you can write a check for $1000, and deduct that amount on their next pay. I'll walk you through the steps.

First, you'll want to set up an Other Current Asset account called Employee Cash Advance.

1. Go to Accounting and choose Chart of Accounts.
2. Choose New and select Other Current Assets.
3. Select Employee Cash Advance and name it the same way or indicate the employee's last name on it.
4. Click Save & Close.

Second, write a check for the employee and use the Employee Cash Advanced account in the Category details section of that check. This will increase the amount in the asset account.

Third, set up a deduction item called Cash Advance Repayment in the employee's profile. We'll use this when deducting the CA from the employee's payroll.

Fourth, go to your Accounting preferences in the Payroll Settings. Then, assign the Employee Cash Advance account to the Cash Advance Repayment payroll item.

1. Click the Gear icon.
2. Choose Payroll Settings.
3. Go to Preferences > Accounting. Or, directly click the pencil icon in the Accounting section.
4. Assign the  Employee Cash Advance account to the Cash Advance Repayment payroll item.
5. Click Done.

Fifth, on the next payroll, please be sure that there is a repayment amounting to $1000. This will zero out the balance in the asset account as well.

Let me know if you need more help with your payroll. Have a good one!

Thanks JessT, 

This got me set up! I did have to click “Advanced” in the payroll settings to assign the Employee Cash Advance Account to the Employee Cash Advance payroll item.

However I still have one stumbling block.  This method involves a paper cheque.  Any way to send it through the direct deposit that I already have set up for the employee?

Yes, you'll have to select the Create another check option when running your payroll in QuickBooks Online (QBO), @Gordeee. This way, you can pay the mid-month draw through direct deposit and keep your account updated.

In QBO, selecting the Create another check option is the equivalent process in running an unscheduled payroll in QBDT. Since you've already set up your employee for a direct deposit, you should be able to send the mid-month draw through it. Let me guide you how.

1. Go to the Workers or Payroll menu.
2. Select Employees.
3. Click the Run payroll button.
4. Find the employee you want to pay, then select Create another check.
5. Enter the amount for the employee cash advance ($1000).
6. Confirm the pay period and date above next to the Pay from field.
7. Select Preview Payroll, and then click Submit payroll.
8. Click Finish payroll.

Once done, I'd recommend pulling up a payroll report (Payroll Summary). This way, you'll be able to verify the employee's your employee's total wages, deductions, contributions, and taxes. Just go to the Payroll section from the Report menu's Standard tab.

Additionally, here's an article that contains the complete list of payroll reports available in QBO: Run payroll reports. It also includes the report definition and the steps on how to customize and print one to name a few.

Please let me know if you have other concerns. I'm just around to help. Take care always.

So it appear to be half working.  I am able to pay the mid month draw of $1000 and the end of month hours/rate (less the draw deduction) by direct deposit. 

Here is the problem, the deduction at the end of month appears to negatively effect the Employee Cash Advance account but the mid month draw does not positively affect this account.  It appears to be positively affecting the Wages account. 

When I go to Settings/Payroll Settings/Preferences and select "I use different accounts for different wages" it won't let me select the Employee Cash Advance account because it's not an expense account.