Pay and cash purchases

Hi KGrove 

There are a few different ways you could deal with that situation of an employee having the money paid directly to the company:

One way you could do it would be:

1. Create a holding account - Accounts>>Accounts Lists>>Liabilities>>New - give the account a number and a name
2. Create a new deduction category with that newly created holding account as the Linked Payable Account - Payroll>>Payroll Categories>>New - give the category a name, set the Linked Payable Account to be that holding account. I would set the Calculation Basis to be User-Enter Amount per Pay Period. You will also need to select Employee at tick the appropriate employee.
3. Prepare the pay for the employee as per normal, however, once you have entered the desired amount of hours/wages... you would take the net pay value and add that as a negative amount against that newly deduction category. For example, if the net pay is $451 you would enter -$451 against that deduction category.
4. Continue to process the pay as per normal, you will encounter an error relating to the pay being a void amount. This is due to the fact that the net pay amount is $0.00 just continue as per normal.

Once that pay has been processed, you'll have an amount in the holding account which can be transferred to another account if required through a Journal entry or another type of transaction.

The process is similar for the employee who you mainly paid in advance. However, it is recommended to check with an accountant to ensure that the above process meets your reporting requirements.