A secured business loan is money borrowed or secured against an asset you already own. This could be something like a car, premises or anything or value that will be used to secure payment to the creditor in the event that you are unable to repay the loan. In contrast, an unsecured business loan doesn’t require you to provide anything as security. Instead, you borrow a lump sum and then pay this back with interest over an agreed timeframe.
Go to:
‘Admin’ > ‘Payroll’ > select the current pay period and an employee > ‘Add pay item’ > add the salary advance amount > type in ‘Salary advance’ in the ‘Description’ field, and save the changes
Then in the next month’s pay run:
‘Admin’ > ‘Payroll’ > select the current pay period and the same employee > ‘Add pay item’ > add the salary advance as a negative value > fill in the ‘Description field, and save.
For example, if the salary advance is £2,000 – you’ll need to add the negative amount of £-2,000.
Note: Salary advances are typically adjusted in the following month's payroll, but can be done at another time, depending on your agreement with the employee.
A salary advance is not a loan – there is no interest charged to the employee. Salary advances are taxed like regular income.
If the salary advance you’ve paid to an employee for a year is more than £10,000, HMRC may consider them as a Benefit in Kind, meaning you’ll need to report this in a P11D form.
