[accountingiseasy]

Hi new to the accounting field, however, I have been presented with a project. I work for a small service business. The staff is requesting salary deductions to be done for personal loans payable to banking institution. (not payable to the company), what accounts and/or entries needs to be effected/posted?

For a further breakdown of what I'm asking - sally has a loan with BankAmerica with monthly payments of $325 and she wants it to be deducted from her salary and a cheque from the company paid to BankAmerica for this loan. (this is just an example)

Thanks in advance for any and all help!!

[morgaine300]

I hope you're charging Sally a fee to do that.

It's basically like any other deduction. If you deduct a tax, it goes into a tax payable until whatever time it's due and then paid. Same thing here - stick it into a payable, though I'd be tempted to come up with some creative name for it so it doesn't look like the company's own loan. (Even if you just call it like "Employee's note payable" or something.)

[accountingiseasy]

Thank you morgaine 300.

So that I'm clear the deduction would appear in this payable account as a cr and when the cheque is processed that amount is debited from the same account.

[morgaine300]

Right.

[ArcSine]

Hi, gang... just popping in with a tangent thought. That's a nice gesture on the company's part to take on some of the employees' own bill-paying chores for them*, but what if--say, through a simple error--the company made a remittance late? Who is responsible for the late fee, and would there be any ill-will from the employee if there resulted a smudge on said employee's credit report?

*(Morgaine's already touched on that thinking, asking if there's a small convenience fee for this service.)

Have an excellent weekend, all!

[accountingiseasy]

Yup there is a fee for doing it and the late fee will be paid by the company, so it better not be late!

Thanks!