Advance Holiday Pay

Legacy KB ID: 1917

Question

What does the Advanced Holiday Pay feature do and how do I use it?

Answer

You can use the Advance Holiday Payment feature in QuickBooks to advance holiday pay to an employee before they take their holiday. Once an advance holiday payment is created for an employee, you cannot process another payroll payment to that employee during their holiday period.

When an advance holiday payment is created for a holiday period covering multiple pay periods, QuickBooks distributes the gross holiday earnings evenly over the pay periods.

If the gross holiday earnings can be distributed evenly amongst the pay periods (in other words, the amount of earnings is the same for each pay period), one advance holiday payment can be issued for the entire holiday period. However, if the gross holiday earnings cannot be distributed evenly (for example, a bonus is due in one pay period during which the employee is on holiday), you must create an advance holiday payment for each pay period with a different earning, otherwise the tax will not be worked out correctly.

An advance holiday payment, cannot be edited once the payment has been created. If you need to edit an advance holiday payment, you must delete it, and then recreate it.

Creating an advance holiday payment for an employee

If you are creating an advance holiday payment for an employee on the same day as their 'regular' payroll payment, create the 'regular' payment first. An employee's 'regular' payroll payments must be up-to-date before you can advance him or her their holiday pay.

When you create an advance holiday payment that covers more than one pay period, you can create one payment that covers the entire holiday period as long as the earnings remain the same for each pay period. If the earnings are different between pay periods, (for example, a bonus is due in one pay period) then you'll have to create a separate payment for each holiday pay period that is different.

  1. From the Employees menu, choose Pay Employees.
  2. Select the employee for which you are advancing their holiday pay, and click 'Enter hours and preview payment before creating'.
  3. Click Create to display the Preview Payroll Payment window.
  4. Review the payment details to ensure they are correct for the holiday period that is being paid to the employee. You shouldn't need to change the Pay Period fields as QuickBooks remembers the last time an employee was paid, and, as a result, sets these dates to the next available pay period for the employee. (If necessary, QuickBooks will adjust these dates after you set up the advance holiday pay details in step six.)
    Note: If this advance holiday payment covers more than one pay period, leave the details of the payment on the Preview Payment window to reflect only one pay period. QuickBooks will automatically calculate the sum of the holiday earnings by multiplying the earnings shown on the Preview Payment window with the number of specified holiday periods.
  5. Tick the Advanced Hol. Payment check box to display the Advance Holiday Payment window.
  6. In the 'Number of holiday periods' field, type the number of pay periods that occur during the employee's holiday, and then press the TAB key. For example, if an employee is paid weekly, and she is taking two weeks holiday, type 2 in this field.
    Note: When an advance holiday payment covers more than one pay period, QuickBooks automatically calculates the holiday end date and pay period end date based on the number of specified holiday periods.
  7. Click OK. QuickBooks works out the details of the advance holiday payment.
  8. Click Create to create the advance holiday payment.
    Another payroll payment cannot be processed for employees during their holiday period.

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