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Level 1

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?

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Best answer 10-19-2018

Accepted Solutions
Level 15

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

View solution in original post

13 Comments
Level 15

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

View solution in original post

Level 1

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

If we made the loan then it is correct as an asset?
Level 15

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

yes, they owe you money, that debt is an asset
Level 4

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.
Level 1

That cleared it up. Thanks!

That cleared it up. Thanks!
Level 4

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

Glad to help add to Rustler's comments. :)
Level 1

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

How does it get coded?

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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!

Level 1

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

 

 

Level 2

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!

Level 7

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.
Level 2

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

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.

QuickBooks Team

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

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:

  1. Go to the Create (Gear) icon and choose Bank Deposit.
  2. Enter and select the appropriate data.
  3. Click Save and Close.

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!

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