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ltpbuilders
Level 1

settlement liability

Hello,     The company I work for has a large settlement with an Ex-employee for funds they paid out of pocket for years ago on a variety of company bills.  This will be paid to the Ex-employee over a number of months.  I assume this should be put against accrued earnings. and I will need to enter this as a notes payable ?

2 Comments 2
MadelynC
Moderator

settlement liability

Thanks for posting your concern in the Community, @ltpbuilders.


Yes, you can put the figure against accrued earnings and enter it as notes payable. You can also reach out to your accountant for other options. They can share insights to ensure your books are accurate.   


If you don't have one yet, you can visit our ProAdvisor website to find an expert. Our advisors can guide you further from technical and accounting perspectives. Just simply enter your city or ZIP code.

To manage your employees and payroll efficiently, you can visit this site: Workers and employees.


Don't hold back to drop a comment below if you have other questions or concerns besides settlement liability. I'll be here to help. Take care!

Rainflurry
Level 13

settlement liability

@ltpbuilders 

 

You definitely want to check with your CPA and/or attorney.  The payments can be either deductible, nondeductible or capitalized depending on the allocation of the settlement.

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