Employee Advance Pay / Loan

[noamparn]

One of our employees has asked for a loan, to be paid back over the next 10 weeks with a portion of the loan taken out of her weekly paycheck.

Since the loan is really a pay advance, it would need to be given without being taxed, and then have the after-tax deduction taken from the next 10 paychecks.


Is there a way for TimeTrex to track this, and automatically calculate the new paycheck amount?

Thanks.
--Noam

[noamparn]

Okay, I think I figured it out, using three Paystub accounts:

Employee Loan (Earning - but exempted from taxes)
Employee Loan RePayment (Employee Deduction)
Employee Loans (Accrual - linked to both accounts above)

I added the pay stub amendment for the loan, and it shows up correctly.
A test amendment for the repayment also showed up, and the balance on the accrual account showed up correctly, too.

I tried setting up a Recurring PS Amendment, but it doesn't seem to show up on the pay stub. I tried setting it to be effective today, and also yesterday, and neither one worked, even when I recalculated the company, employee, and pay stubs. Is that one of the things that is a scheduled maintenance job, so it won't show up for 24 hours?

Also, I scheduled the Recurring PS Amendment for 10 weeks. Is there a way to schedule it to run until the balance on the accrual account is "0" instead? I would tell it how much to withhold from each paycheck to repay the loan, and it would continue to do it until the loan was paid back. If the remainder of the loan is less than the weekly payback amount, then it would only withhold the remaining amount of the loan.

It isn't that big a deal, since the Accrual account is tracking it all, for me to check each week, and make sure the payback is showing up. However, it would be nice for it to happen automatically.

Thanks.
--Noam

[shaunw]

You're on the right track with the pay stub accounts.

Regarding the Recurring PS amendment, maintenance jobs convert them into regular PS amendments each night, so you do have to wait a day, and even then it don't create PS amendments retroactively, only going forward, so you need at least one day between when you created the Recurring PS amendment and the date that the first regular PS amendment is created.

Instead I would recommend using the Tax / Deduction system. See the Administrator Guide for Tax / Deductions and the "Fixed Amount w/Target" calculation formula:

http://www.timetrex.com/wiki/index.php/ ... Deductions

Once you have it setup, you can just add additional employees to it and it will automatically handle any loans in the future for you as well.

[noamparn]

Thanks, I think I have it figured out now.
I'll know for sure next week, though.

Is there a way for me to set a specific start date for the deduction for each employee?
Otherwise, this pay stub is showing a loan of $500, and a repayment of $50 on the same paycheck (which is only giving the employee $450).

Other than de-selecting the employee from the deduction, or setting the deduction amount to $0 until after this pay cycle, is there a way to have the repayment only start next week?

I don't want to set a "start date" for the deduction, because that would set it for all employees.

Currently, there is only one employee with a loan. However, if there were a second employee with a loan, that is an extra step to remember to go back and set the deduction amount later on.

Thanks.

[shaunw]

Not at this time. You could of course create a new Tax / Deduction for each employee or group of employees with the same start date.

[noamparn]

Thanks.
for now, I think I'll just add a reminder to my calendar to change the deduction amount on Sunday.

Is it possible that we might see that feature in a future version?

--Noam

[shaunw]

I have made a note of it in our TODO list. I doubt a feature to set the start date on a per employee basis will appear, more likely will be a feature to delay the first loan payment to the pay period following the one that the loan was paid on.

[noamparn]

That works, too! (although I don't know how you would track that, unless you have it NOT do a deduction if there is a contribution to the "loan" account on the same paycheck.

[noamparn]

I made the adjustment to the deduction, but it doesn't show up if I add hours and re-calculate her pay stub for this week.
I am guessing that might take a day to happen?

My other concern, however, is that I can't figure out how to get a report of how much the balance is on the loan, other than bringing up her pay stub.
Using the Accrual report, or the General Ledge reports don't give me any results at all. (there are no items in the list).

[shaunw]

I made the adjustment to the deduction, but it doesn't show up if I add hours and re-calculate her pay stub for this week.
I am guessing that might take a day to happen?

What adjustment did you make? With the Tax / Deductions they appear on the pay stub immediately after recalculating it if all the eligibility criteria are met.

As for seeing the accrual balance, you can include Accrual - Loan pay stub account on the Pay Stub Summary report, you may need to include more than one pay period though as it doesn't show YTD/Balance totals, but if you include the last X pay periods you can see a total.

[noamparn]

I gave her the loan on Thursday, the pay period ended on Saturday, and the transaction date was today (Sunday).
So, in order for TimeTrex NOT to deduct the weekly payment amount from the loan, I had set it to $0 last week, until after I completed this week's payroll.

Today, I went in and changed the deduction amount back to $50.
Since there were no hours on the timesheet yet, I understand that going to "recalculate pay stub" will not produce any pay stubs to look at.
However, I went in (as a test), and added hours to Sunday and Monday, and then tried to recalculate the pay stub again.
It correctly showed the hours, and the salary for the, but didn't show the deduction for the loan payback.

What am I doing wrong?

thanks.
--Noam

[noamparn]

I think I got it now.
For the tax/deduction entry, I had put down the "accrual" account in the "include pay stub accounts" section, instead of "total - Total Gross."
So, it was only taking something off the accrual balance if I was adding anything to the accrual at the same time (pretty silly of me).

Once I changed it to "total Gross," it looks like it is working properly again.

[noamparn]

I've been using this for a few weeks now, and I think I created a problem for myself with it.
Since the "Employee Loan" shows up in the top (payroll) section, and the repayment shows up in the middle (Employee deductions) section, the employee's total YTD gross pay is not going to match at the end of the year for taxes (I don't think).
I think it will end up showing the Gross Pay as $500 more than it really is, since it would count the loan in that Total Gross.
I did a quick check, and the "Taxable Wages" correctly shows $500 less than the "Total Wages" on the tax form.
I did set the taxes to exclude that payroll account, but I'm wondering if there was a better way to do it so that the "Total Wages" would be correct.

[shaunw]

The YTD gross earnings on a pay stub aren't designed to be the employees total taxable earnings at the end of the year, unfortunately the government makes it much more complicated than that.

What you've done with adjusting the tax forms is the correct approach.

[noamparn]

Thanks for your answer.
As long as the "Taxable wages" matches what it should be (which it looked like it did in my test earlier), I think I should be okay.

[noamparn]

I have another problem with this (and I still think I'm doing something wrong).
My employee finished paying off the loan last week.
However, when I look at this week's pay stub (partial week so far), it shows a "deduction" of $50, and now it shows a POSITIVE balance on the loan of $50 (meaning she paid back a total of $550 on a $500 loan). I thought when I set the "target/limit" field to "0", that it would stop when the balance went down to 0.

What am I doing wrong?

[noamparn]

I'm sure you'll need more information and/or screenshots from me.
Please let me know what you need to help me troubleshoot this, as I need to process the payroll on Sunday, so I only have a few days to work this out.

Thanks.
--Noam

[shaunw]

Yes, we will need screenshots of everything involved, the pay stub itself, the Tax/Deduction for the loan (with all fields expanded), any PS amendments that affect it, and your pay stub accounts too.

[noamparn]

I think this is everything you asked for. Please let me know if you need more screen shots, or if there is any other information you need from me.
Thanks.
--Noam

1. Latest Pay Stub. "Employee Loan RePayment" shows 50 (should be 0 now), and "Employee Loan" Balance also shows 50.

2. Prior Pay Stub (last week - notice that the loan balance is 0 - it was a negative number the whole time she owed anything)

3. Tax/Deduction Screen: (I didn't expand the "employee" section - there is only the one employee selected, but I would have blacked out the name anyway).

4. Pay Stub Amendment:

5. Pay Stub Accounts:

[shaunw]

In the Tax / Deduction, the included pay stub account is Total Gross, so based on the documentation the loan payment won't stop until the Total Gross YTD amount is $0, which will never happen.

You need to change the included pay stub account to Accrual - Employee Loans, then it should work properly for you.

[noamparn]

In the Tax / Deduction, the included pay stub account is Total Gross, so based on the documentation the loan payment won't stop until the Total Gross YTD amount is $0, which will never happen.

You need to change the included pay stub account to Accrual - Employee Loans, then it should work properly for you.

Thanks. I knew I was making a mistake somewhere, but I didn't know where.

I'll give it a try.
Do I need to go back and re-do all of the prior pay stubs for this employee?

--Noam

[noamparn]

In the Tax / Deduction, the included pay stub account is Total Gross, so based on the documentation the loan payment won't stop until the Total Gross YTD amount is $0, which will never happen.

You need to change the included pay stub account to Accrual - Employee Loans, then it should work properly for you.

Thanks. I knew I was making a mistake somewhere, but I didn't know where.

I'll give it a try.
Do I need to go back and re-do all of the prior pay stubs for this employee?

--Noam

One thing I don't understand - don't I want to deduct the repayment from the user's earnings on that paycheck, though?

[shaunw]

In the Tax / Deduction, the included pay stub account is Total Gross, so based on the documentation the loan payment won't stop until the Total Gross YTD amount is $0, which will never happen.

You need to change the included pay stub account to Accrual - Employee Loans, then it should work properly for you.

Thanks. I knew I was making a mistake somewhere, but I didn't know where.

I'll give it a try.
Do I need to go back and re-do all of the prior pay stubs for this employee?

Nope, just re-generate the last pay stub and it should be fine.

[shaunw]

In the Tax / Deduction, the included pay stub account is Total Gross, so based on the documentation the loan payment won't stop until the Total Gross YTD amount is $0, which will never happen.

You need to change the included pay stub account to Accrual - Employee Loans, then it should work properly for you.

Thanks. I knew I was making a mistake somewhere, but I didn't know where.

I'll give it a try.
Do I need to go back and re-do all of the prior pay stubs for this employee?

One thing I don't understand - don't I want to deduct the repayment from the user's earnings on that paycheck, though?

Why?

[noamparn]

I originally gave the employee a loan of $500, which showed up as earnings on her paycheck on that pay period.
I then wanted to reduce her pay by $50 a week, until the loan was repaid.
Why am I pulling the $50 from the accrual balance, and not from the Total Gross wages?

Okay, I went in and made the change.
To test that it would have worked had I done it earlier, I changed the "target" to "-125" (negative 125), and then recalculated. Sure enough, it took out another $50.
I then changed the target to "-25" (negative 25), and it only took out $25, since that's the point at which it reached the target.
It looks like it works, I just don't understand HOW it works (and THAT drives me nuts!)

I guess I don't understand what the "Include pay stub accounts" function does, and why I would use it against the accrual, and not against the total gross earnings for the pay period.

I think part of my confusion stems from the fact that I added a pay stub amendment of $500, which went into the "Employee Loans" accrual account as a NEGATIVE balance, which then worked its way back UP to 0.

I'll have to revisit this if she ever needs another loan, I guess