My company regularly give employees a small interest free loan to help them out sometimes till next pay day. This used to be done via petty cash and was all paid back as a post tax deduction on payroll. However some employees have not been able to pay the loan back all in one go and have strung it out over say three months payroll. This is getting a bit hard to keep control of so can anyone suggest what would be the correct postings for say a loan by a bank payment direct to the employee and repaid by deductions from net pay. I am a bit confused because although the loan can be recorded simple enough because it comes out of the bank, the repayments must be journal entries?
Just a thought - but my understanding is that you shouldnt use journals to/from Bank if its Sage (well if its older versions as they dont show up in the Bank Rec, not sure about newer versions as not tried it out yet!).
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I would post the bank payment to a loan account (somewhere in the 23** or 22**). Then as part of your wages journal the net wages paid will be reduced and the loan repayment will be a cr to the loan account.
Hope I haven't misunderstood and this helps
Hi
When you set up your loan post it as Anne says to 22** - in fact what you can do is set up a loan for each staff member so you can easily track it in sage by adding an extra digit to make your sage nominal 5 digits long eg use 22**1 for one member of staff, and 22**2 for another.
When you do your initial loan to the staff - use the 'bank payment' icon from the Bank and key it to that staff members loan nominal.
When you calculate the wages - key all your nominals exactly as you would as if no loans were in place.
Then when you pay the wages - journal the amount of the loan repayment you are taking - from 2220 net wages (dr) to the staff loan (cr) 22*** Then also 'bank payment' the reduced amount you are actually paying to the staff, as usual.
Do a backup before each transaction until you are comfortable with keying it - then look at each nominal account activity so you can see the debits/credits impact)
Hope that makes sense
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thanks very much for your help. Luckily there are only three or four staff involved in this so it won't be too bad. Using a an extra digit on the nominal for each staff is a great idea - I did not know you could do that, but will I have to alter the chart of accounts. I am not an accountant and would prefer not to have to change anything here.
Hi Marina
Ive used the extra digit with every version of sage apart from 2015 (only reason Ive not done it on that is due to just loading it on my PC and not having time to move everything across yet!!) - never caused any issues with Chart of Accounts because they are in ranges, so as long as you are not using the last one in a range it will be ok. Back up and try it and just set one up - then go to COA and click 'check' - if it shows no errors then you are ok. If there is an error do a restore and either re-post so I an try it on mine (when I have a min, tomorrow) or just set up five new 4 digit codes, one for each staff (although you might not have enough room if you get another 5 staff doing it, although I would discourage the 'loans' in the first place!). Or of course you could just do it through one nominal.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Can you please talk to my boss and tell him not to do employee loans - they are a PITB - lol! I have set up the loans through just one nominal - safer for me I think.
Thanks everyone for your help with this - much appreciated.
I did think that you had a new acronym for Benefits in Kind (although its too low for that!) but then realised what you were getting at. Ive known a few who are a PITB and have happily told them to their faces, lol.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
