How to record a loan paid to an employee

Hi, @kdblu.

To record a loan paid to your employee, you need to handle two main phases: issuing the funds and setting up the repayment deduction. 

Phase 1 involves recording the loan you issued to your employee by creating an asset account.

Here's how:

1. Go to Lists and select Chart of Accounts.
2. Click New and choose Other Account Types, then Other Current Asset.
3. Name it according to its purpose for easy tracking.
4. Once done, click Save & Close.
   
   

Once done, track the actual loan you paid to your employee. If you released it via cheque, follow the steps below:

1. Move to the Banking section and go to Write Cheques.
2. Choose Employee in the Pay to the Order of field.
3. Select the asset account you just created in the Expenses tab. 
4. Then, Save & Close.

For Phase 2, you'll need to set up the repayment item and add assign it to the employee deductions.Here's how to achieve it:

1. Go back to the Lists section, then Payroll Item List.
2. Click the Payroll Item button, then select New.
3. Select Custom Setup and click Next.
4. Move to the Deduction tab, then Next.
5. Enter the name of the item. For example, "Cash Advance/Loan Repayment" and then Next.
6. For the Liability Account field, choose the other current asset account you created in Phase 1. This ensures that as they payback, the loan balance decreases.
7. In the Tax Tracking Type window, choose None. 
8. Click Next through the following screens until you reach Gross vs. Net. Make sure to select Net Pay.
9. Hit Finish to save it.

After that, assign this item to your employee and enter the deductible amount per pay period. 

Let me know if you have additional questions. We're here to assist you promptly.