cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Not applicable

Our chart of accounts shows employee loans as an "other current assets". Is that the best way to categorize them? I would think it was an expense or A/R

I am not fully understanding why a loan that we give to an employee would be an asset? It is money we are out up front and (hopefully) paid back at a later date. I would assume it is an A/R but maybe there is some other way to classify it. If there is, how would I change this account?

Solved
Best answer 10-19-2018

Accepted Solutions
Established Community Backer ***

If you made the loan to the employee, then yes that is co...

If you made the loan to the employee, then yes that is correct

11 Comments
Established Community Backer ***

If you made the loan to the employee, then yes that is co...

If you made the loan to the employee, then yes that is correct

Not applicable

If we made the loan then it is correct as an asset?

If we made the loan then it is correct as an asset?
Established Community Backer ***

yes, they owe you money, that debt is an asset

yes, they owe you money, that debt is an asset
Community Contributor ***

Yes Employee Loans (or Advances) are an Other Asset (Othe...

Yes Employee Loans (or Advances) are an Other Asset (Other Current Asset if it will be repaid within 1 year).  It is similar to Accounts Receiveable but that is for amounts due from customers.

I hope this was helpful.
Not applicable

That cleared it up. Thanks!

That cleared it up. Thanks!
Community Contributor ***

Glad to help add to Rustler's comments. :)

Glad to help add to Rustler's comments. Smiley Happy
Frequent Explorer **

Re: Glad to help add to Rustler's comments. :)

How does it get coded?

QuickBooks Team

Re: Glad to help add to Rustler's comments. :)

Hello, @JillP34.


Thanks for coming to the Community for help.  I can help you record the loan in QuickBooks Online.


As mentioned above, you would need to set up an Other Current Asset account called Employee Cash Advance or Payroll Receivable.

Here’s how:
1.    Go to Accounting from the left menu and select Chart of Accounts.
2.    Click New.
3.    On the Account Type field, select Other Current Asset.
4.    Under Detail Type, choose Employee Cash Advances.
5.    Enter name.
6.    Hit Save and Close.

 

 


Once done, write the advance check by debiting the new account and crediting Cash. When deducting from your employee’s pay, credit the new account and debit Payroll Payable.


That should answer your question for today. Let me know if you need further assistance working with QuickBooks, I’ll be here to help. Take care and enjoy your day!

Established Member

Re: Glad to help add to Rustler's comments. :)

what if the loan is repaid in more than one year

1- how do we classify it

2 - dose the classification change each year

 

 

Established Member

Re: Glad to help add to Rustler's comments. :)

If this is a loan to a subcontractor, would I select the Detail Type as 'Loan to Others' and Name it something like Loans to Subcontractors? Would I then deduct from the subcontractor's payment or is there a better way?

 

Thanks!

Established Community Backer ***

Re: Glad to help add to Rustler's comments. :)

A loan to anyone where you will be deducting amounts owed to you from payments to them is more often called an Advance, since you have essentially paid them in advance for work they will do for you. Same for employees.