How to track Employee Loans in QuickBooks

Issuing/Repaying an Employee Advance

First Part:

Create a check

  1. Pay to the order of the Employee but listed as a vendor
  2. Enter Account – use “Employee Loan” (or similar other current asset)

Second Part:

Go into Employee Center

  1. Scroll to the Employee
  2. Edit Employee Information
  3. Change tab from Personal Information to payroll & compensation
  4. Under the section “additions, deductions…” Enter a line at the end
  5. Employee Loan 1, 2, 3 etc. (you will have to create a new payroll item mapped back to Employee Loan. – see below for instructions**)
  6. Enter the withholding amount from each paycheck
  7. Enter the total amount of the loan

Third Part:

After Loan is paid off, you can leave it in the history.  If there are more loans, just use the next available number.

**To setup a Payroll Item Code –

From payroll Item List, click CTRL – N

Select Custom Setup, click next

Select “Deduction”, click next

Name it “Employee Loan 4” (use next number), click next

Tab twice, and change the liability account to “Employee Loan” (or similar asset)

Click Next FOUR TIMES

Move dot to “NET PAY”

Uncheck the box “this is an annual limit”

Click FINISH

 

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