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msalamone-buholt
Level 2

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

We are not looking to get interest from this loan, just not sure how to set it up.
Solved
Best answer August 08, 2023

Best Answers
RCV
QuickBooks Team
QuickBooks Team

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

Let me help you record the loan and repayment given to your employee in QuickBooks Online (QBO). 

 

In QuickBooks Online, we can set up a liability account to record the loan and its payments. This account tracks what you owe. First, we need to create and set up a liability account so you can record the loan. Here’s how: 

 

  1. Go to the Gear icon on the top menu.
  2. Select Chart of Accounts.
  3. Click New to create a new account.
  4. From the Account Type dropdown, select Long-Term Liabilities. If you plan to pay off the loan by the end of the current fiscal year, choose Other Current Liabilities instead.
  5. From the Detail Type dropdown, select Notes Payable.
  6. Give the account a relevant name.
  7. Choose when you want to start tracking your finances. In the Balance field, enter the amount in the account, and determine the as-of-date. Enter today's date if you want to start tracking immediately.
  8. Press Save and Close.

 

Then, follow Steps 2 and 3 to finish the process in this article: Set up a loan in QuickBooks Online. Since you don't want to deduct the loan repayment from your employee's paycheck, you can create a deposit for it.

 

I'll add some articles for additional details about handling accounts in the Chart of Accounts:

 

 

Keep me posted if you have other questions about recording loan payments. I'll be happy to help you again. Stay safe!

View solution in original post

6 Comments 6
RCV
QuickBooks Team
QuickBooks Team

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

Let me help you record the loan and repayment given to your employee in QuickBooks Online (QBO). 

 

In QuickBooks Online, we can set up a liability account to record the loan and its payments. This account tracks what you owe. First, we need to create and set up a liability account so you can record the loan. Here’s how: 

 

  1. Go to the Gear icon on the top menu.
  2. Select Chart of Accounts.
  3. Click New to create a new account.
  4. From the Account Type dropdown, select Long-Term Liabilities. If you plan to pay off the loan by the end of the current fiscal year, choose Other Current Liabilities instead.
  5. From the Detail Type dropdown, select Notes Payable.
  6. Give the account a relevant name.
  7. Choose when you want to start tracking your finances. In the Balance field, enter the amount in the account, and determine the as-of-date. Enter today's date if you want to start tracking immediately.
  8. Press Save and Close.

 

Then, follow Steps 2 and 3 to finish the process in this article: Set up a loan in QuickBooks Online. Since you don't want to deduct the loan repayment from your employee's paycheck, you can create a deposit for it.

 

I'll add some articles for additional details about handling accounts in the Chart of Accounts:

 

 

Keep me posted if you have other questions about recording loan payments. I'll be happy to help you again. Stay safe!

msalamone-buholt
Level 2

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

Thank you for your help. 

SarahannC
Moderator

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

You're always welcome, msalamone.

Glad to hear that my colleague was able to help you in no time. Please know that you can post your concern here anytime. 

We're always here to help. Bye for now, and have a good one!

btks
Level 5

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

You would set up a current ASSET account called something like "loan to employees "or "employee advances". When you loan out the funds put it to this account with the employees name. When you receive payments the payment will go back to this account. This will allow you to keep track of the balance due. It also keeps the money from showing as income as it is paid back.

 

Rainflurry
Level 14

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

@msalamone-buholt 

 

Just as an FYI - loans to employees should have a written agreement and interest.  I have been through several payroll audits and auditors do not like interest-free loans to employees.  It's like paying your employee wages but not paying employment taxes.  

Books by SJ
Level 1

How do I record a small loan and payments to us given to an employee that will not be coming out of his paycheck?

What if employee defaults on loan and quits?

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