North Pacific Accounting White Logo - Seattle Bookkeeping Logo

How to process an employee advance in Gusto

Processing an employee advance in Gusto involves a few straightforward steps. We do recommend getting terms of the advance and repayment in writing before processing the payment to the employee. This is especially important if the resulting pay check after reimbursement will bring the net pay below minimum wage. Gusto is an online payroll and HR software that simplifies managing employee finances. These steps are right from Gusto’s support article found here. We provide detail on each step as needed. Here’s how you can handle an employee advance using Gusto:

Set up a payroll advance

  1. After logging in to your Gusto Admin profile, click the Pay section and select Run payroll.
  2. Click Off-cycle payroll from the list on the right-hand side.
  3. On the next page, select the employee(s) this Off-cycle payroll should apply to.
    • Employees can be selected through the search bar, filtered by department/job titles, or directly via the check-box.
  4. Click Continue to enter Step 1 of the Off-cycle payroll.
  5. Once in Step 1, enter a work period.
    • The timeframe in which the employee worked to earn this payment.
      • If you enter a timeframe in which an employee has requested time off, the off-cycle payroll will include and pay out the time off.
    • Off-cycles do not accrue time off.
  6. Select the payment date.
  7. If you have multiple bank accounts set up, select which bank account you’d like to process payroll from.
    • If you do not see this option, head to this article to learn more.
  8. Select if you want deductions and contributions to be included. Please reach out to our team if you have any questions about the deductions and contributions.
    • Block all deductions and contributions:
      • We will not make any benefit deductions or contributions.
        • Important: We’re unable to turn off 401(k) deductions and contributions due to the requirements of most plans.
    • Make all the regular payroll deductions and contributions:
      • We’ll make all your normal benefit deductions and contributions.
      • If your benefits are managed by Gusto, your standard benefit will not automatically be applied unless you choose them to be included.
  9. Review the tax withholding rates.
    • If you want to make a change, click Edit rates under the Tax withholding rates section.
  10. Enter the payroll advance as a Reimbursement.
    • This should be the take-home amount for compliance standards.
  11. If you’d like, click Add Personal Note to leave a note to specify this additional payment is an advance. 
  12. Click Save & continue.
  13. Add in any time off or sick hours for the employee(s) selected.
  14. Click Save & continue.
  15. Review the details of your payroll. When you’re ready, click Submit payroll. If you need to make changes, click Go back.

Next steps

Once you’ve processed the payroll, be sure to set up a one-time post tax deduction for the amount of the reimbursement. On the next payroll, the amount advanced (reimbursed) will be deducted from the employee’s pay and left in the company bank account.

Typically, we like to recommend setting up the advance using the reimbursement option rather than increasing the Gross or Net pay options on the off-cycle payroll. Using the gross or net pay options on the off-cycle payroll can impact salary calculations and resulting payroll taxes that may be calculated based on hours worked.

Table of Contents

Scroll to Top