Hello there, SL_110.
Let me help you record outstanding advances in QuickBooks Online (QBO) and track future repayments.
Since these funds were a pay advance that employees are required to repay, it’s necessary to create a liability account to record the amounts owed. This account will reflect the advances provided to employees and show the total balance still outstanding.
Here's how:
- Go to the gear icon.
- Select Chart of Accounts.
- Click New to add a new account.
- Set the following details for the new account:
- Account Type: Other Current Liabilities.
- Detail Type: Employee Advances.
- Name: Employee Pay Advances or similar.
- Save the account.
After you pay your employees, create a journal entry to reflect the advances made 20 years ago. This journal entry ensures that the liability is accounted for in your books while balancing the payroll expenses historically.
Here's how to do it:
- Select + Create.
- Select Journal Entry.
- Debit the relevant account, for example, Payroll Expenses or Checking Account, depending on how you originally paid the advance.
- Credit the liability account you created (Employee Pay Advances).
- Save and close.
When an employee separates and repays the advance through their final paycheck, record the repayment as follows:
- Select + Create.
- Select Journal Entry.
- Debit the liability account.
- Credit the payroll expense account.
- Save and close.
For more information about the payroll process, you can also check out this article: Manually enter payroll paychecks.
Additionally, to ensure accurate tracking of outstanding advances in QBO, I also recommend consulting with an accountant.
Please let us know if you need further assistance with recording transactions in QuickBooks.
