Need to make changes or updates to your accounts or subscriptions? Visit the Account Management Page
QuickBooks HelpQuickBooksHelpIntuit

Set up and repay employee advances

SOLVEDby QuickBooksQuickBooks Desktop Payroll54Updated August 29, 2022

Learn how to pay an advance to your employees in QuickBooks Online Payroll and QuickBooks Desktop Payroll. Then set up a payroll deduction to claim back the amount of their advance from each paycheck.

Advance pay is a great way to help your employees out in a pinch. You can set up an advance item to pay them. Then, set up a deduction item on their paycheck to get your money back.  

Select your product below.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Pay an advance to your employee

There are several ways to pay an advance to your employee. You can:

If you choose to create a paycheck for the advance, you'll need to set up an advance pay item. 

  1. Set up Other Earnings pay type.
  2. In the Additional pay types section, select Other Earnings. Select Edit ✎ to rename it as Advance payment.  
  3. Add the amount or enter it as you run payroll.
  4. When finished, select Save.
  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Addition, then Next.
  5. Enter the name of the item, such as Employee advance.
  6. Select the expense account where you want to track the item. Select Next.
  7. Set the tax tracking type to None. Select Next.
  8. Select Next twice. You don’t need to do anything on the next two windows.
  9. Select net pay in the Gross vs. net window. Select Next.
  10. Leave Default rate and limit fields blank. You can add the amount when you create your employee’s paycheck.
  11. Select Finish.

Note: When you create a paycheck, the advance item and the amount must be added in the Other Payroll Items section.

Now that you've set up your employee advance payroll item, it's time to create a paycheck with it.

Step 2: Set up an advance repayment item

Set up a cash advance repayment item to get your money back from your employee.  

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Deductions & contributions, select Start or Edit.
  4. Select + Add deduction/contribution.
  5. From the dropdown menu, add the following:
    • Deduction/contribution type: Other taxable deductions
    • Type: Cash Advance Repayment
    • Description: Add a deduction name, such as Cash Advance Repayment.
  6. Select Flat amount
  7. Enter the amount to deduct from your employee’s paycheck.
  8. If you need to collect the advance over more than one paycheck, enter the total amount owed in the Annual maximum field.
  9. When finished, select Save.

Step 1: Create a repayment item

  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Deduction, then Next.
  5. Enter a name, such as Cash advance repayment. 
  6. In the Liability account field, select the expense account used to give the advance.
  7. Set the tax tracking type to None. Select Next.
  8. Select Next twice. You don’t need to do anything on the next two windows.
  9. Select net pay in the  Gross vs. net window. Select Next
  10. Leave Default Rate and Limit fields blank. Select Finish.

Step 2 (Optional): Add the item to the employee profile 

  1. Go to Employees, then Employee Center
  2. Select your employee. 
  3. Select Payroll Info, then add the repayment item in the Additions, Deductions, and Company Contributions section. 
  4. Select OK, when you're done.

Note: Add a limit to the employee's profile if you'll need to collect the advance on more than one paycheck.

Step 3: Create a paycheck with the repayment payroll item

Create a paycheck with the advance repayment item. If the advance is more than the amount of your employee's pay, you’ll need to collect it over more than one paycheck.

Was this helpful?

You must sign in to vote, reply, or post
QuickBooks Online Payroll CoreQuickBooks Online Payroll EliteQuickBooks Payroll AssistedQuickBooks Payroll BasicQuickBooks Payroll EnhancedQuickBooks Payroll Standard

Sign in for the best experience

Ask questions, get answers, and join our large community of QuickBooks users.

More like this