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How to match advance payments to an employee against their payroll cheque?

Forum|Forum|4 years ago
March 6, 2022
3 replies
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Several advance payments have been made to employees against our payroll. The advances were occasional and for various amounts. Payroll was run as if no advance payment was made and the cheque cut for the nett pay, less any advances made during the period. The bank transactions cannot be matched to the payroll as the amounts are not the same. How could this be dealt with to match past transactions, and how should this be done in the future? Thanks for any assistance!

QuickBooks Online

Best answer by ROBIN-BC-CANADA

Is there a way to go back and add the deduction of the advance to the payroll cheque?

I could add the cash advance into an Employee Cash Advance account, by issuing a cheque transaction in the amount of the advance, then apply it as a deduction to the the pay cheque.

That way, in my example, the $500 advance will appear int the Employee Cash Advance account and can be matched with a payment from the bank feed.

Then my $900 paycheque would have the $500 advance deducted and the balancing payment of $400 will now also matched with a payment from the bank feed.

So, can I edit a payroll cheque to add a deduction? I can't see an immediate way to do this.

Thanks for your help!

I did invent a solution... 11 steps...

1. Create an Employee Cash Advance account in QB chart of accounts

2. Create cheques in QB for all the cash advances, dated same day as the historic advance payments were made

3. Go to the transaction feed and match off all the advance payments from the bank feed against these new cheques

4. Now the bank feed is left with the balancing payments made against the paycheques.

5. Go into the paycheque list

6. Delete all the paycheques against which advances were made (obviously copy details first!)

7. Go to the employee section and create a payroll deduction equal to that advance made against the first deleted paycheque

8. Now go to payroll and recreate the paycheque by rerunning the payroll for period of the deleted paycheque - NB set the pay date to the original paycheque pay date or the taxes may be wrong!

9. Reprint the revised pay stub to give to the employee

10. Go to the bank feed and match the paycheque to the balancing payment which was made previously

11 Repeat steps 7-10 until all the deleted paycheques have been recreated.

A

Archie_B

Level 6

Welcome to the Community, ROBIN-BC-CANADA.

Let me help and share what I know about handling employees cash advance repayment in QuickBooks Online Payroll.

Make sure to consult an accountant or tax adviser before setting up the payroll item for the cash advance repayment.

You can set up a a cash advance repayment to deduct your employee's paycheck and exclude the transactions showing in your bank feeds so don't have to match it. Let me show you how to set up the payroll deduction item in QuickBooks Online Payroll Enhanced.

Here's how:

Go to the Payroll menu, then choose Employees.
Tap on the employee's name.
Click edit (pencil) icon in the Pay section.
Click Add a new deduction and select the cash advance deduction you created above.
Select either $ Amount or % of Gross Pay.
Put the amount or percentage.
Enter the annual maximum amount (optional).
Select OK, then Done.

If you're using QuickBooks Online Payroll Full Service, QuickBooks Online Payroll Core, QuickBooks Online Payroll Premium, or QuickBooks Online Payroll Elite, you may check the detailed steps in this article: Set up cash advance repayment deduction.

Once done, use this link as a reference in excluding the bank transactions in QuickBooks Online.

Please don't hesitate to get back to me if you still have other payroll concerns or follow-up questions. I'll be happy to help. Have a great day!

R

ROBIN-BC-CANADAAuthor

Thanks for the reply, Archie_B.

This looks like the same info I read in the QB Help topic on this matter.

However, this doesn't appear help me for historical payments as I have already made the cash advances and then run the payroll as I described.

This method may work for going forward but looks clumsy as the deductions appear to have to applied as if they are ongoing and not simply applied to a single payroll period.

Have I misunderstood?

Thanks - Robin

R

RCV

QuickBooks Team

Thanks for coming back, ROBIN-BC-CANADA.

Yes, the bank transactions will not be matched to the payroll as the amounts are not the same since the deductions are not included in the paycheck. To match advance payments to an employee against their payroll checks, we'll need to exclude first the bank transactions and make sure to deduct the advance payment moving forward. Here's how:

Go to the Banking menu, then choose the Banking tab.
Scroll down to select the For Review tab.
Tap the check boxes of the transactions to exclude.
Click the Batch actions drop-down button, then choose the Exclude Selected option.

Once done, the transaction moves to the Excluded tab of the Banking page. Once a downloaded transaction is either accepted or excluded, QuickBooks will stop the bank from bringing the transaction into the bank feed again. Here's an article you can refer to for more details about excluding a bank transaction you downloaded into QuickBooks Online.

For historical payments, we'll need adjustment and payroll correction. Here's an article you can refer to for more details about setting up a prior payroll for QuickBooks Online Payroll. Since paychecks are already created, I'd suggest contacting our Payroll Support Team. They'll access your account and create an adjustment to record the old payroll transactions before using QuickBooks. Here's how to reach out to them:

Click the (?) Help icon in the upper right-hand corner of the Dashboard.
Select Talk to a Human.
Enter a short description of your concern and press Enter.
Click I still need a human.
Select Contact Us to connect with our live support.
Choose Get a callback.

Feel free to visit our Banking page for more insights about managing your company's income and sales transactions.

Please update us after contacting our support as I want to make sure this is resolved for you. Just leave a comment below and I'll get back to you. Have a great weekend.

R

ROBIN-BC-CANADAAuthor

Hi Archie_B

Responding to the above:

Excluding transactions: I do not want to exclude the prepayment transaction that I import form my bank.

The transaction is part of my payroll payment.

Here's what I did:

Employee A receives an electronic bank advance of $500 before payroll date

I then run payroll. Employee wages (nett) are $900 for the period

I electronically transfer the balance of $400 to the employee.

Both transactions appear in my bank feed, but what do I do with them to make them match to the payroll 'cheque' of $900?

Historical advances: All advances have been made whilst using QBooks for payroll. My issue does not refer to pre-Qbooks payroll.

Thanks again for your patience!

B

Bkkprgal

Robin,

You might have already figured this out, but you have two options.

Exclude the bank feed transactions and when you reconcile, just remember to check off the $900 so the statement balances.
Open the bank feed transaction and click Find Match. You may need to change the filters around to get it to look everwhere - ie: Show:All; and the From/To dates. Then hopefully you'll see your $900 transaction in the list. Check it off. You'll see that there is a balance difference at the bottom and there's an option to Resolve - don't click that. Just hit Save. Now go to the other bank feed transaction and do the same thing. Ideally, you'll see that same $900 payment, hopefully with the amount leftover to be matched showing in the Open Balance column. Check that transaction off and you should be good to go.

Hope this helps!

B

Books12345

Thank you for the work around! I was able to follow the steps successfully. Wondering what happens with the account created in step 1? Should it sit with a balance for the advanced amount?

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