How You Can Pay Employees With Money In Quickbooks - The Easy Way Safeguard Your Company

Sometimes companies have to pay their employees with cash, verses giving a paper salary. You will find a few reasons the company might want or have to do this:

The company is getting income problems, and having to pay employees from money is simpler to handle.The worker might not have a banking account. Cashing a salary is tough and/or costly, and direct deposit isn't a choice.

Companies should not simply hands employees cash for work carried out. There must some form of paper trail to prove:

with what manner the worker received the fundsonce the worker received the fundsthe way the gross pay was calculatedwhat employment taxes were withheld in the pay gross pay versus. internet pay.

Every one could well be a possible problem that may arise when the worker disputes the pay, or in case of a employment tax or work comp audit.

This is how to pay for employees with cash, while still safeguarding the company from potential issues:

1. The company should be setup with some form of payroll service. Either QuickBooks should be enabled to do payroll, or perhaps an outdoors service ought to be used. In either case is not important, but in some way payroll taxes, etc., should be calculated properly.

2. Produce a salary within the normal way, while using bank account to attract from, or perhaps a special bank account for payroll, for those who have one.

3. Possess the employees endorse the inspections - he/she's signing it to you.

4. Spend the money for employees cash. It should be the precise amount around the inspections, towards the cent. No fudging here! This will be significant, since the cash compensated out must reconcile towards the check amounts. When the amounts aren't exact, it will likely be hard to reconcile them.

5. Go ahead and take inspections towards the bank and deposit them into the bank account. Don't void them within the software. Although negating them has got the same internet impact on the financial institution balance, the accounting software cannot compute the gross pay and payroll taxes properly if they're voided.

Another alternative would be to simply create "dummy" inspections on blank paper. Make certain the workers take their signatures in it. Pay with cash, towards the cent.

The employee's signature around the salary or "dummy" check is vital - by doing this, the worker cannot claim he/she wasn't compensated.

After this method, you're simply cashing the employee's income on their behalf. This leaves an excellent paper trail for the accountant or auditor to follow along with. Things are clean, above-board, and clear to see.

My thanks would go to Suzanne Mead, Licensed QuickBooks ProAdvisor at http://forums.quickbooksusers.com/index.php, with this excellent tip. Thanks Suzanne!