CenterPoint Accounting - Advance Pay To Employees

A payroll advance is a receipt of pay prior to your next regular pay check which is then repaid through a payroll deduction on future payroll checks.

Step A: Create an Advance Earning (one-time setup)

Step B: Create an Advance Repayment Deduction (one-time setup)

Step C: Assign the Advance Earning & Repayment Deduction to the Employer

Step D: Assign the Advance Earning & Repayment Deduction to the Employee

Step E: Process a Payroll Advance

Step F: Process Repayment of a Payroll Advance

Prerequisite

An Account must be setup (Setup > Accounts > Accounts) with a type of "Asset" and a category of "Payroll Advances", prior to processing Pay Advances.

Step A: Create an Advance Earning (one-time setup)

The Payroll Advance Earning will be used to process and track payroll advances to employees.

Select Setup > Payroll Details > Earnings. Review the list to see if a Payroll Advance earning already exists. If it does, continue to Step B. If not, click New to add a new Earning.

Enter an Abbreviation and Name to easily identify this earning.
Select a Type of Payroll Advance and a Method of Fixed Rate.

Note: When you select Payroll Advance as the Type, the taxes and deductions & benefits are changed so no taxes will be calculated on these earnings.

In the Expense Account field, select your asset account for Payroll Advances (see Prerequisite). "The selected account is not of the expected type. Use this account anyway?" pop-up message will display. Click Yes to accept.
Select the Taxes tab and verify that it says Exclude.
Click Save.

Step B: Create an Advance Repayment Deduction (one-time setup)

The Advance Repayment Deduction will be used to track the repayment of an advance.

Select Setup > Payroll Details > Deductions & Benefits. Review the list to see if a Payroll Advance deduction already exists. If it does, continue to Step C (Assign the Advance Earning & Repayment Deduction to the Employer). If not, click New to add a new deduction.

Enter an Abbreviation and Name to easily identify this deduction.
Select Employee in the Contributor field.
Select a Type of Payroll Advance Repayment.
In the Liability Account field, select your asset account for Payroll Advances (see prerequisite). "The selected account is not of the expected type. Use this account anyway?" pop-up message will display. Click Yes to accept.
In the Employee Method field, select Fixed Amount.
Accept the defaults in all other fields on the General tab.
Select the Limits tab.

Select the Lifetime option in the Employee Detail section. Doing so will allow you to view the payroll advance amount and the amount repaid so far).
Click Save.

Step C: Assign the Advance Earning & Repayment Deduction to the Employer

Select Setup > Employers.
Select the employer you want to attach the advance earning and repayment deduction and click Edit.
Select the Earnings tab.
In the lower left side of the screen, select Payroll Advance.

In the upper left side of the screen, select the Payroll Advance earning, and then on the right side of the screen, select an Expense Account.

Select the Deductions & Benefits tab.
In the lower left side of the screen, select the repayment deduction for this employer.

In the upper left side of the screen, select the repayment deduction for this employer.
On the right side of the screen, select the repayment deduction and then on the right side of the screen, select the appropriate Liability account.
On the upper left side of the screen, expand the repayment deduction by clicking on the plus sign and then select Employee. On the right side of the screen, verify the Schedule and if a rate applies, enter it on the right side of the screen.
Click Save.

Step D: Assign the Advance Earning & Repayment Deduction to the Employee

Select Setup > Employees.
Select the employee(s) wishing to receive a Payroll Advance and click Edit. Then select the Earnings tab.

In the lower left portion of the screen, select Payroll Advance from the list. Once selected it will display in the upper left portion of the screen, below the employer.
Select the Deductions & Benefits tab.

In the lower left portion of the screen, select the Payroll Advance Repayment from the list. Once selected it will display in the upper left portion of the screen, below the employer.
Expand the Payroll Advance Repayment at the top left of the screen. Click on the Employee line.

In the Rate field on the right side of the screen, enter the amount that should be deducted from each for repayment of the payroll advance.
In the Lifetime Limit field, enter the amount that was or will be advanced to the employee. The Amount Repaid field will automatically report how much of the advance has been repaid.
Click Save.
Repeat steps 2-5 for any employee that needs a Payroll Advance.

Step E: Process a Payroll Advance

Select Processes > Payroll > Pay Employees.
Click New to create a new pay run. Select the employee needing the advance.
Select the 2. Enter Pay tab.

If this is a salary employee, zero the salary rate in the regular earnings. The Net Pay on the left should begin with zero dollars.
In the Regular Earnings list on the right, select the Payroll Advance earning and enter the amount of the advance in the Rate field.
Click Save. No taxes, deductions or benefits will be calculated.
Process and Post the pay run. The net check will be the advance amount.

Step F: Process Repayment of a Payroll Advance

For each subsequent pay run processed, the Payroll Advance Repayment deduction will verify if a balance for this employee exists. If a balance exists, the amount specified in Step C will automatically be deducted from the employees check. If the balance owed is lower than the deduction value, the remaining balance will be paid.