Choosing a payment method for invoice paid by employee

Hello,

I'd like some help with selecting/setting up an appropriate payment method for invoices paid by employees. 

Ideally we would like to post the invoices that have been paid by employees in order to track both project costs and how much money we spend with specific vendors. 

We reimburse employees for any purchases they make via our external payroll company. Reimbursements are entered with their corresponding expense codes in a reoccurring transaction that is paid from our bank account to the payroll company; however we are not currently tracking any invoices paid by employees.

Thanks in advance!

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  • 0

    Verify that the purchase invoice has your company name on it and not the employees. If employee names are on the purchase invoices then they could be liable for additional income since money reimbursed is treated as 'income' - employee purchase a product/service and 'sold' it to company.

    Enter the invoice under the vendor name expensing it, claiming GST/HST and allocating to the project.

    Create a liability account called something like Employee Purchase Payables and enter full amount of invoice as a credit to the new liability account nbr (or you could class it as a bank and use this account nbr as the 'Paid From' bank). This will net the invoice out to nil and track what is owed to employee. The payment to employee thru payroll would be coded to the new liability account nbr thus creating a running balance of what has been purchased by employees under the vendor name and has been reimbursed to employees.

    Hope that makes sense?

  • 0 in reply to Smith and Co

    "...Create a liability account called something like Employee Purchase Payables..", how do you track what is owed to each employee ?

    do you use a department for each employee and assign these departments to the liability account -

    and use 'allocate account amounts to department' when creating the paycheck and recording the income ?

    because when I tried that, I couldn't link the liability account to an income, can only link expenses accounts ?

    you can link a liability account to a deduction, but then you need to do a negative amount to debit the payable

  • 0 in reply to Roger L

    I'm not sure if I am reading all these posts correctly.  Efisher26 indicated the payroll is being done externally, so I would not recommend recreating everything again under payroll to do a reimbursement if the company is paying someone else to do that work.  All these entries would be done through the general journal under a typical setup.  Efisher26 left this out of the original post, but I would have to assume this is the setup based on the rest of the information posted.

    Running through Purchases under "a vendor name" will allow for project allocations, proper expensing and proper sales tax handling all in one entry.  Picking the vendor name is the problem because of what should go on the cheque.

    So the problem here is that the tracking should be by vendor but the cheque must be written to the payroll processing company (which sounds really strange to me).  If you are cutting a separate cheque, why not just hand the cheque to the employee on payday?  That solves the tracking by vendor issue.  Why send it to the payroll company, so it can then be sent to the employee.  I am ignoring the ease for the employee to have it deposited directly to the employee's bank account.

    If the current process must be maintained, then the way to solve the issue is that the cheque must be printed with the payroll company's name.  So create a payables cheque template that uses either the contact only as the name on the cheque or replace the Vendor Name field with one of the Additional Info fields from the Payables Ledger for that/those vendor(s).

    When creating the cheque, make sure an Additional Info field is set to pop-up with a note that indicates a different vendor name so that the user can switch templates to print properly.  Just make sure to switch back.

    Hope this helps

  • 0 in reply to Roger L

    You can keep copies of invoices with the employees name noted on it in a folder and reconcile to the liability account every payperiod. The copies would be given to employees when paid back to them. The allocation to projects would be for the expenses only to that job project - nothing to do with the employees themselves and there would be no allocation done thru payroll.

    You are correct in that the liability account is linked in payroll thru the deduction tab and amount entered as a credit.

    RandyW - I have done it both ways, I myself prefer to pay employees as vendors rather then pay thru payroll, a different story tho when employees purchased for themselves thru company's charge account and now having the purchase deducted from paychq which I use the same method above except not claiming the GST/HST.

    When I pay with employees as vendor I then enter the original invoice to the vendor name coding to an expense account and allocating to project, make a copy of invoice with employee name written at top and post to employee name and code to a contra acct (classed as bank), then pay employee with a chq or EFT or??, and then pay original invoice thru vendor name using contra acct as the bank and using employee initials combined with chq nbr as the chq nbr. A bit convoluted initially but it does document all the steps. In my case I added astericks in front of employee names when creating them as vendor so that they remained at top of vendor listing and can easily be separated out of payable aged listing.

  • 0 in reply to Smith and Co

    example:

    Original Invoice is:

    Home Depot 11.20 including all taxes

      posted to vendor name of Home Depot as 10.70 to G/L5555 expense and .50 to G/L2470 GST

      Paid to Home Depot from bank acct of G/L1005 Contra Acct using chq nbr as RogerJChq/EFT1234

      Pmt receipt attached to Home Depot and filed under vendor name of Home Depot

    Copy of Invoice with "Roger, Jolly" written across top of invoice::

    Roger, Jolly

     posted to vendor name of Roger, Jolly as 11.20 to G/L1005 Contra Account

     Paid to Roger, Jolly as Chq/EFT1234 from G/L1060 Bank Acct

     Pmt receipt attached to invoice copy and filed under vendor name of **Roger, Jolly

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  • 0 in reply to Smith and Co

    example:

    Original Invoice is:

    Home Depot 11.20 including all taxes

      posted to vendor name of Home Depot as 10.70 to G/L5555 expense and .50 to G/L2470 GST

      Paid to Home Depot from bank acct of G/L1005 Contra Acct using chq nbr as RogerJChq/EFT1234

      Pmt receipt attached to Home Depot and filed under vendor name of Home Depot

    Copy of Invoice with "Roger, Jolly" written across top of invoice::

    Roger, Jolly

     posted to vendor name of Roger, Jolly as 11.20 to G/L1005 Contra Account

     Paid to Roger, Jolly as Chq/EFT1234 from G/L1060 Bank Acct

     Pmt receipt attached to invoice copy and filed under vendor name of **Roger, Jolly

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