How To Record Employee Advances In QuickBooks Online
As a business owner, there will be times when you’ll need to give an employee a cash advance. This could be for one of two reasons: you purchased something for an employee with the agreement they will pay you back, or you’re giving an employee an advance on their check. Let’s go over how to do record these in QuickBooks Online. First, you’ll want to create an Employee Advance account (unless you already have one). If you often give out employee advances, creating sub-accounts would be helpful, using the employee’s name.
To Set-Up Employee Advances Account
When you’re in the Accounting tab of QB, click “New” and the Account template will pop-up, which you’ll set up accordingly:
Category Type → Other Current Assets
Detail Type → Employee Cash Advances
Name → Employee Advance
If you paid for something for an employee’s personal use, with the agreement that the employee would pay you back, you’ll need to start by recording it as an Expense. Under “account,” you’ll need to select “Employee Advance” using the drop-down arrow. Include a memo with the employee’s name, stating it was a personal purchase/loan.
When the employee pays you back, you will list this as a Deposit. Select who you received the money from and choose the “Employee Advance” account. Under description, it would be helpful to say this is a repayment of the advance.
If an employee asks for a cash advance on their paycheck, you’ll select “Check” and then choose the “Employee Advance” account. Write a memo with the employee’s name, stating this is an advance on their next paycheck.
To see all of this done within the QuickBooks app, watch our Tutorial. The video goes on to explain how you would deduct advances from paychecks and what all of this activity looks like within your Employee Advance account. If you have any questions, you can always contact us!