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DG3
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How to record bank withdrawal to pay employee in cash?

Owner of business withdrew $417 from bank account X and paid an employee in cash. How do I record this? Do I record the withdrawal using the petty cash account and then do a journal entry for show a deduction of petty cash and add to wages account?

6 Comments
Super Explorer **

Don’t you love when owners do things like this?  You shou...

Don’t you love when owners do things like this?  You should record the paycheck as normal.  Make a not that the employer withdrew cash in lieu of the check.  Clear it like a check.  put cash in the check # place.  

Super Explorer ***

Re: Don’t you love when owners do things like this? You shou...

also, if you create a paycheck it will automatically deduct taxes. To stop this from happening for this one time pay, edit the Employee details  Withholdings and mark as Do Not withhold.

Be sure to change this back to what it was for the next paycheck.

Experienced Member

Re: Don’t you love when owners do things like this? You shou...

Do we do anything differently than the above mentioned if we already deducted taxes from the cash paid to the employee?

Moderator

Re: Don’t you love when owners do things like this? You shou...

Hi there, @Kfasthoff.

 

I'm glad to see you joining the thread. Allow me to help share some insights about recording the cash paid to your employee with deducted taxes.

 

You don't have to change anything. The paycheck will automatically deduct the taxes so there's no need to change anything on your employee's details. Just ensure that the deducted taxes from the cash paid to your employee is the same as the taxes deducted in the system.

 

Let me know if you have other questions about recording the paycheck. I'd be glad to help you however I can.

Highlighted
Senior Explorer **

Re: Don’t you love when owners do things like this? You shou...

How do is this recorded in Quickbooks when depositing the employee check that you cashed back to the bank deposit?

QuickBooks Team

Re: Don’t you love when owners do things like this? You shou...

Hello there, @lydbrewer.

 

If you've paid your employee using a physical check and let him or her cashed it out, you can just create a regular payroll. Just make sure you're using paper check for recording purposes. While, if you've paid your employee using a regular paycheck but was unable to cashed it instead you've paid her with cash. Let me share some details on how  to document this transaction.

 

First, let's run a regular payroll:

  1. Go to the Employee's menu.
  2. Choose Employees.
  3. Select the Run Payroll button.
  4. If you're using different pay schedule, choose the specific pay schedule for the paper check.
  5. Click Continue
  6. Mark the name of the employee.
  7. Enter the employee paycheck, then click Preview Payroll.
  8. Hit Submit Payroll.
  9. Click Finish Payroll.

Once completed, let's create a bank transfer in QuickBooks to account the movement of money from Cash on Hand or Petty Cash to your payroll bank account. 

  1. Click the Plus Icon (+).
  2. Choose Transfer.
  3. From the Transfer Funds From drop down list, select the bank account that the funds are coming out of.
  4. From the Transfer Funds To drop-down list, select the bank account the funds are being deposited into.
  5. In the Transfer Amount field, enter the amount being transferred.
  6. Edit the Date.
  7. Add a memo on the Memo field to indicate the reason for the bank transfer.
  8. Click Save and Close.

Alternately, you can create a journal entry to record the entire transaction. For more detailed steps, you may check this article: Create a journal entry.

 

For additional reference, you can check these links:

If you're referring to something else or you have other questions, feel free to leave a post below. I'm always here to help.