How do I record a loan made to an employee?

Create an asset account called something like, due from [name] and use that

Hello there, girard31.

We can set up an Other Current Asset account to record the loan you've made to an employee. Here's how:

1. Go to Accounting on the left panel.
2. Within the Chart of Accounts tab, click the New button at the upper-right corner.
3. Choose Other Current Assets in the Account Type and select Employee Cash Advances in the Detail Type.
4. Then, click Save and Close.
   

Once done, you can create a deduction item for the repayment. If you don't want to deduct the loan repayment to your employee's paycheck, you can create a deposit for it.

Also, you can check this article for additional details: Set up a loan in QuickBooks Online. Also, I'll add some articles for additional details about handling accounts in the COA:

• Learn how to delete bank, income, and other types of accounts from your chart of accounts.
• Move your chart of accounts to QuickBooks Online. 

Let me know if you have other questions. Take care and stay safe always!

Followed the instructions. Still cannot get paychecks with employee advances to post. 

Thanks for joining this thread, RJGoodmanEA.
 

To verify my understanding, were you able to create a deduction item for your repayment? This information will help me better understand which steps need to be taken next to get your employee's paychecks to post.
 

I'll be looking forward to hearing back from you. Have a great day!

Hi I actually have the same question. My client loaned $6,000 to an employee, I set up the current asset account like explained above. I then created a loan repayment deduction for the employee. However, it did not allow me to select an account for the deductions, instead it made another current asset account. How can I get the deductions to deduct from the correct loan account so we can keep an accurate running balance in the COA?

Thanks for joining the Community, jdesai.

You can set up loans in your books by creating liability accounts to track what's owed.

Here's how:

1. In the left navigation bar, go to Accounting, then Chart of Accounts.
2. Click your New button.
3. From the Account Type ▼ drop-down list, choose Long Term Liabilities. If it's planned to be paid off by the end of the current fiscal year, pick Other Current Liabilities instead.
4. In your Detail Type ▼ drop-down, choose Notes Payable.
5. Give the account a name.
6. In the Balance field, enter the amount that's currently in your account.
7. Determine the as of date. Enter today's date if you want to start tracking immediately.
8. Select Save and close.

Once you've created an account for your loan, you'll be able to enter the loan itself. As for handling employee deductions, you can find detailed steps for working with deductions in our Add or edit a deduction or contribution article.

Please feel welcome to send a reply if there's any additional questions. Have an awesome Friday!

In the balance field, are you referring to the account balance that it will be paid from or are you referring to the amount of the loan itself? 

Thank you 

Hi @msmith717-yahoo-,

Thank you for posting here in the Community. Allow me to chime in and help you set up the loan in the chart of accounts.

We recommend you use a liability account to track a loan in QuickBooks Online. To answer your question, my colleague is referring to entering the full amount of the loan in the Balance field.

The balance will be deducted once you record the loan repayment later on. This way, the remaining amount will be tracked properly based on the payments you'll enter into the system.

Also, you can journal entries to track loans. For more details about how to use the Credit and Debit side, I suggest checking out this link: Create a journal entry in QuickBooks Online.

Drop me a comment if you have more questions about entering the balance. I'll be sure to help you some more. Take care always.

Do I use a payroll check or an a/p check?

Hi there, @amyp.

Let me help you with what check you'll use.

You can utilize the payroll check. However, I recommend contacting your accountant to avoid discrepancies in your book.

You might want to create journal entries for paychecks you create outside of QuickBooks in the future. You can read this article: Manually enter payroll paychecks in QuickBooks Online.

Feel free to return here for additional questions about managing your transactions. I'll be willing to lend a hand. Have a good day.

Actually, the situation I have is slightly different.  An employee needed to reimburse the company for a per diem check that wasn't used, but cashed.  The employee wanted it deducted from her paycheck.  I set up an employee repayment account using other receivables as the account.  Do you know what other account this hit when I entered the deduction?  Now, I need to have a credit to the funding source.  Would I just enter that into the account to reverse the initial per diem check?  Thanks!

Thank you for raising your concerns here, Employee. My priority is to guide you in recording employee per diem checks. Rest assured that you will receive the information needed to resolve your per diem entries in QuickBooks Online Payroll.

To clarify your concern about the repayment account, please understand that only the account you have set up will be affected, and no other accounts will be involved.

For the per diem check, there's no need to enter another account to reserve the transaction. As long as the initial per diem check is recorded in the appropriate accounts, there is no need to reverse them.

Refer to these steps for an overview of how to manage your payroll entries:

1. Go to the Gear icon, then Payroll Settings.
2. Scroll down to the Accounting section.
3. Double-check payroll accounts associated with your per diem check.
4. Modify, then Save and Done.

Additionally, I recommend double-checking with a professional accountant to ensure everything aligns perfectly with internal protocols and accounting standards. Visit this page: The ProAdvisor Program.

In addition, here is another article that can assist you in completing this year's payroll tasks effectively: Year-end guide for QuickBooks Online.

I'm always here to keep you all set while managing your QuickBooks Online Payroll concerns. Leave a comment below, and I'll respond to you shortly.