Repayment to bank account for a Cash Advance

JaimieW · ‎February 25, 2023

I apologize is this has been asked before, but I am stumped right now.

I have established a cash advance for one of my employees. She was issued a check and there will be a deduction weekly from her paycheck to repay this advance. I followed the step by step guides here and established all the proper channels for the setup and repayment. Upon further thought, after the fact, I am having an issue wrapping my head around how I would get the her deductions back into my physical bank account. Common sense says you write a check to the business for the amount, with payment coming from account 2160 or whatever the number is where the deductions get put for credit. However, if I do that, then I am essentially just zeroing out the payment ... ie the initial advance was for $5000. Over the month, she makes $400 in payments. I write a check for $400 to deposit into my bank account. That means a withdrawl of $400 when the check is written and a deposit of $400 when the check goes into the bank, so that is a wash and we still have the original $5000 deficit. I am sure I am just not seeing it and with it being tax season, I can't expect a quick answer from my accountant, so thought I would try here first.

Thanks for any input.

MaryLandT · ‎February 25, 2023

Thank you for taking the time to explain this, JaimieW.

I can provide some clarifications about how paying an advance to the employee and setting up the repayment item works in QuickBooks Desktop (QBDT).

First, since you have already released the money worth $5000, you can write a check in QBDT. This is to record the advance payment made to the employee. Make sure to select the bank where the money was taken from in the Bank Account drop-down. Here's a link for the detailed steps and a sample screenshot: Write a check.

Second, you've mentioned that the repayment should be deducted from the employee's paycheck. You can set up a pay item and include it when running payroll. That way, the employee doesn't need to hand you a check.

Please refer to this article and follow the instructions provided in Step 2: Set up an advance repayment item and Step 3: Create a paycheck with the repayment payroll item sections: Set up and repay employee advances.

Lastly, if the employee chooses to send $400 instead of deducting it from their paycheck, you don't need to write a check for the same amount. Simply record the payment as a bank deposit.

That should do it. If there are other things you need to clarify with, please don't hesitate to leave a comment below. I'll be delighted to help you. Take care and enjoy the rest of the week.

JaimieW · ‎February 25, 2023

Thank you for the reply. That wasn't my issue though. I have everything set up just as you described and know if she gives me additional money it's just a deposit. My question is regarding the monies withheld from the paycheck. How do I get that deposited back into my back account where the original check was written on?

Maybe I am looking at it all wrong. I think so... It won't be physically going back into the account as cash, but it would technically be going in because I would not be writing her paycheck for that extra amount each week. Yeah...I think that is it. Does that sound right?

JaimieW · ‎February 25, 2023

Thank you for your reply.

I typed a whole reply to explain better, but in that process, I think I figured it out.

My question was how to get the physical money being withheld from her check into the bank where the check was drawn. I realized that there isn't going to be physical money. The monies withheld are technically going back into the bank because I am not adding the $100 to the paycheck I am writing each week. Therefore my bank balance is "growing" by that amount.

Sometimes you just gotta take a step back to realize the obvious.

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Repayment to bank account for a Cash Advance