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?
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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.
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!
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?
Can you tell me how we should set up the payment if the employee repays us with a personal check. It appears the way described above is set up to withhold loan repayments via the employees paycheck, but our employee is paying us back all at once with a check. Many thanks.
Thanks for joining this thread, @AMS1.
You can enter the employee's pay back as a deposit transaction. I'm here to walk you through the steps:
To learn more, you can refer to the Record and Manage Bank Deposits in QuickBooks Online article. The link provides an overview and video tutorial to enter the transaction.
You can also check our help articles in case you have any other QuickBooks concerns in the future: Help articles for QBO.
Let me know if you have any other questions. I'm always here to help. Have a good one!
What would you classify the repayment of the Subcontractor's Advance? We are deducting it to the amount we currently owe him since he has not paid the advance back yet.
Sorry for bringing out this old thread but I have the same question someone ask and I would like to make sure I understood.
So are you saying that a loan to a subcontractor could be classified as an Asset? And as someone mentioned above, 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?