Hi ChrisI hope I can explain it properly, here's what I do. It works not only for employees but for each of your own credit cards that you use to purchase goods for the business with.
Create an account with the employees name on it like "Bonnie's Purchases" It is a Liability account with the 'Payments' boxes checked for both Receivables and Payables.
I'll try to use a scenario:If Bonnie buys string from 'Bobs kite shop' and brings you the receipt you create a vendor called 'Bobs Kite shop" (if it's not already a vendor) and you enter the purchase under 'Add AP Transaction' hitting the proper expense accounts.
Next you 'pay' Bob's Kite shop using the 'Bonnie's Purchases' liability account you created as the 'Bank' account. Ask your accountant or make your own mind up on whether to use the date she purchased the string or the day you paid her back for this date. I use the actual purchase date because it's less work.
Now your Income Statement will show the expense of Bob's Kite Shop under 'string expense' and the Balanace Sheet will show 'Bonnie's Purchases' liability account with a corresponding balance.
I don't know if you pay your employees their 'expenses' once a month or as they come. If it's once a month you will be able to track what they are owed on a daily basis by looking at the balance sheet. You can then cut one disbursement cheque at the end of the month.
If you have direct access to Bonnie's bank account and can transfer to it you can just do an internet transfer and use "Cash - transfers" to apply the amount from a bank account to 'Bonnie's Purchases' liability account.
If you must generate a cheque it gets a little more complex and you have to use a clearing account.
Create an 'Employee clearing account'. This is a 'Liability' account and check the AP summary account box.
You can pay Bonnie by selecting 'Cash - Payment' Select the 'All' tick box at the top left and hit update. Then drop down the vendor list and select Bonnie. In the top left change the AP from Accounts Payable to 'Employee clearing account' and choose a bank account to write a cheque from. Then just fill in the amount, print the cheque and post. It won't apply to anything in AP so don't look to apply it to any other entry it is a "Non - AP Cash Disbursement" that simply moves cash from a bank account to a liability account, no sub ledger is used.
Your Balance Sheet will now have an negative 'employee clearing account' value in the Liabilities section (a pseudo asset) and the bank account will decrease. 'Bonnie's Purchases' liability also has an entry of equal size.
You can now use either 'Cash Receipts' or Cash Transfers' to apply the value in 'employee clearing account' to the 'Bonnie's purchases' account which will clear the transaction.
Jeff Roberts Chris Sykes wrote:
HI I'm new to both LedgerSMB and to this mailing list, so sorry if this is a FAQ. I was wondering if anybody had some advice as to how to handle employee expenses within LedgerSMB. For example, if an employee has had to purchase an item from one of our suppliers using a personal credit card. I'd like all such purchases to still be associated with the real supplier (rather than the employee). The company will still be able to reclaim VAT on these purchases. Do I need to set up expense accounts for each of the employees, and record the transactions against these accounts?