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  #1  
Old 02-16-2017, 07:51 AM
smalltowngirl smalltowngirl is offline
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Employee purchase

A purchase was made on our company credit card for a repair bill for an employee. The employee will work extra hours until the purchase $'s is paid back. Therefore, I will never see any repayment to post against this and it is not a purchase for the company. How should I record this credit card purchase?
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Old 02-16-2017, 08:08 AM
BooksInVA BooksInVA is offline
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I would put it in as an employee advance. Then, as the employee works it off, it lowers the employee advance. This is effectively what happened, correct? The only difference is you didn't hand him cash or a check, it went on your credit card?

On a side note, why was this done? Was it a mistake and the employee gave them the wrong credit card in his wallet? If it was agreed to in advance, I wouldn't allow employees to do this, there is too much risk for you.
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Old 02-16-2017, 03:37 PM
Lorin Browning Lorin Browning is offline
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If the employee is working extra hours, be sure to include any overtime pay he may accrue and withhold appropriate FICA amounts from the earnings for the extra hours worked.
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  #4  
Old 02-20-2017, 09:29 PM
smalltowngirl smalltowngirl is offline
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A supervisor authorized this to be paid because the employee needed some help paying for the bill. I don't handle payroll but I do have to log the purchase (cc bill) on the credit card. I can enter it as an employee advance. I just won't be able to reduce the employee advance as it is repaid. Is this okay?
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  #5  
Old 02-21-2017, 07:55 AM
BooksInVA BooksInVA is offline
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No, you need to be able to make a deduction to his pay. Whoever is doing payroll needs to do that.
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  #6  
Old 02-22-2017, 06:56 AM
Joe Williams Joe Williams is offline
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The original employee advance should be a Check and use an Other Current Asset account named Employee Advances.
Create a payroll DEDUCTION ITEM that is non-taxable that use that account.
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  #7  
Old 02-22-2017, 11:12 AM
smalltowngirl smalltowngirl is offline
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Thank you!!
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  #8  
Old 02-23-2017, 08:35 AM
Lorin Browning Lorin Browning is offline
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The original post said in part: "The employee will work extra hours until the purchase $'s is paid back."

If he is working extra hours, those hours are included as part of his pay and the company is responsible its share of FICA on those hours worked.

The important distinction is not that something is being withheld from his paycheck to meet his debt obligation to the company. The important distinction is that he is working extra hours to meet that obligation. That he is not going to directly receive funds for those extra hours worked does not make them non-taxable.

For example, suppose the worker's pay stub normally shows 40 hours per week as earnings. If he is going to work, say, an extra 8 hours per week until his debt is paid, the pay stub will then show 48 hours worked (with the 8 hours being reported as overtime as 1.5 times his regular pay rate. Those 8 hours will be used in calculating payroll taxes withheld, Social Security and Medicare withheld, and Social Security and Medicare owed by the company.
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  #9  
Old 02-23-2017, 09:18 AM
BooksInVA BooksInVA is offline
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How is that different than he being paid for the hours and having a deduction for the employee advance? Couldn't it just be an exact wording issue on the original poster's part?
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  #10  
Old 02-23-2017, 02:25 PM
Lorin Browning Lorin Browning is offline
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It could well be that I've missed the point of the original post, although I still believe there are payroll considerations that haven't been addressed.

Perhaps her concern is only what receivable to post the payroll deductions against. That would have been done when posting the original credit card bill. After each company purchase was entered to the appropriate expense account (all debit entries), the employee's purchase would be entered not as an expense but as a receivable (also a debit entry).

Perhaps the posting of the original credit card bill may have to be adjusted since not all of the purchases are company expenses as smalltowngirl correctly pointed out in her original post -- an approach which is compatible with Joe Williams earlier post other than the fact that the repayment would be taxable..
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Last edited by Lorin Browning; 02-23-2017 at 02:27 PM.
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  #11  
Old 02-24-2017, 09:23 PM
smalltowngirl smalltowngirl is offline
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My concern was as Lorin suggested....how to post the one credit card purchase that was not a company expense. Instead it needed to be posted as a receivable........an advance.
Thank you all.
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