Repayment of an Employee Advance.

Question:

I gave an employee an advance to his pay via check (not through
payroll)He now wants to pay it back but I am not sure on how to enter this part
of the transaction.

Joe

Answer:

First of all congratultions, its rare to see an employee who wants to pay back an advance. The question I usually get is how do I set up a garnishment on their payroll check to get my money back. So give the guy a raise!

To answer your question, there are two ways to go about this:

1. Set up a payroll advance item on his payroll check. This is probably the way to go if you give advances fairly frequently. QuickBooks Payroll should walk you through this. You may have already done this when you gave him the advance. If so, tell him to keep his money and then deduct the amount from his next paycheck...via the same item that you used to give it to him (just input it as a negative this time).

2. If payroll advances occur infrequently for your company, just use a journal entry to put the money back.

DEBIT - Cash/Checking
CREDIT - The account that you put the advance in the first place. (Usually, Payroll advance - Employee Name (a current asset account)).