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Payroll deductions for Employee purchases
Situation
Your clients do their own payroll, and they permit employees to purchase goods, and they want employees to be able to pay for those goods with a payroll deduction.
Response
Here's how they can set up and use that function.
Configuring Your Company File for Employee Purchases
Before you can create transactions for employee purchases, you have to set up the list components you'll need, which are the following:
A customer record for the employee. You can not duplicate the name you use in the employee record. Use a nickname, or use the format "employee name-cust", such as SmithJ-Cust.
An account to track employee purchases. The account is of the type Other Current Asset. Name the account Employee Purchases (or something similar).
An Item of the type Discount, which you can name Employee Purchase. The item is non-taxable, has a default amount of $0.00, and is linked to the Other Current Asset account named Employee Purchases.
A Payroll Item that is a Payroll Deduction, named Employee Purchases. Link the payroll liability account for this item to the Other Current Asset account named Employee Purchases. Apply the item to Net pay (not Gross).
Creating an Employee Purchase Transaction
Here's how to create an invoice that will be paid from the employee's paycheck:
Create an invoice for the employee/customer.
Enter the services or items purchased by the employee/customer on the invoice,using the pricing structure for employees (which may be the same as forother customers).
In the next item line, enter the discount item you created for employee purchases.
Enter an amount equal to the total of the employee's purchases.
The balance of the invoice is now $0.00. However, the Employee Purchases Other Current Asset account has been increased by the amount for the discount item.
Deducting Payment from the Paycheck
When you create a paycheck for the employee, add the Employee Purchases payroll deduction item in the Other Payroll Items area of the Preview Paycheck window. Either enter the full amount owed, or a partial amount (and deduct the rest from subsequent paychecks).
If the full amount is deducted, the Employee Purchases Other Current Asset account has no balance. If a partial payment is deducted, the remaining balance equals the balance in that account.
Tracking Multiple Employee Purchase Accounts
If multiple employees make purchases that are deducted from paychecks, you track each employee's current balance by creating and memorizing a report, as follows:
Choose Reports, Custom Transaction Detail Report.
In the Date Range field, select All.
Click Modify Report.
In the Display tab, select Sort by Customer
In the Filters tab, select the Employee Purchases account.
Memorize the report (the name Employee Purchases seems appropriate).
