Pay Advances & Loans

Pay advances and loans allow you to advance additional money to an employee when you process a paycheque. The money advanced to the employee can then be recovered in the next pay period on another paycheque by entering a negative amount in either the Advances or Loans row.

As you may know, payroll advances paid against future earnings should be included in future income and taxed. The Advances option in Sage 50 Accounting calculates taxes. The Loans option in Sage 50 Accounting does not calculate taxes. If you are providing a payroll advance that is taxable, you would use the Advances option. Consult your federal and provincial tax authorities to determine which taxes apply to the advance.

There are two scenarios in which taxes do not need to be calculated for pay advances:

ClosedOverpayments

ClosedThe employee will "repay" the advance within the same remitting period

Note: Payroll advances or loans should not be used as a regular method for paying employees.

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