About employee loans

Some companies provide long term loans or interest-bearing loans to employees. Instead of writing a payroll check for the advance, write a general ledger check to the employee. Post the amount to the loans receivable account. If you don't have a subaccount for loans receivable, you can set one up.

If you give several employees long term loans, consider using subsidiary accounts to track each loan separately. Because loans are posted to different ledger accounts than payroll advances, set up a separate payroll calculation to recover the loan.