Payroll Garnishments
A customer recently asked Kevin this payroll question:
“I have a new employee that I have to take out a garnishment. I’m not sure which liability account I should put in to set up the garnishment code. I called the accountant and he said he uses 112 Employee A/R, that when we pay it to the courts it is taken out of that and balanced itself out. Is that how you would have me do it?”
Kevin says:
- Close, I would set up the garnishment code as liability in PR. And use the opposing account in AP liability. You could use the same account if you wanted. Remember money in and then money out. First you need to set up a GL account as a liability for the Garnishment. Yes, this could be general, if you want. All garnishments would go here. In this example I named it after the state/local courthouse.
- Now when setting up the vendor who will receive the money, place the 2125 Liability account as the expense account. Carry the PR (AP) code as the opposing account. Money in and money out. 2125 will debit and credit but different times. PR will put the money in, PR will take it out when you pay the bill.
- If you are on AP integrated in PR the vendor will be easy to look up, and the bill will be entered. As shown below:
- If you are not integrated to AP in PR, then you will put the money into the 2125 account waiting to enter in the bill and pay it in AP:
- The only change is how you set it up in PR. You could use the Garnishment code for all Garnishments, or use a new number for each garnishments and history look up.
Kevin
Senior System Trainer
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