Page 233 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
Asset Purchases
An employer may allow its employees to either purchase assets from the
company or through it. In the first case, the company may be liquidating
assets and so offers to sell them to its employees. In the latter case,
employees are allowed to use the company’s bulk-purchase discounts to

obtain items at reduced prices from other suppliers. The company may
also sell its own products at reduced prices to employees through a com-
pany store.
Perhaps because of the discount prices, some employees make such
large asset purchases that they are unable to pay back the company imme-
diately for the full amount. Therefore, the company allows them to
make payments through a series of payroll deductions. In such a case, an
employee should sign an agreement with the company, acknowledging
responsibility for paying back the company and agreeing to a specific

payment schedule. Though not common, the company can also charge
the employee an interest rate, which may encourage the person to pay
back the company sooner to avoid an excessive interest expense.
For long repayment schedules, it may be useful to keep employees
apprised of the remaining amount of each loan, therefore the payroll
staff should consider either maintaining a separate schedule of payments
or creating a loan goal through its payroll software that tracks the amount

of the debt that has not yet been paid.

Charitable Contributions
Many employers encourage their employees to give regular contribu-
tions to local or national charities, of which the United Way is the most
common example. Employers typically have employees sign a pledge
card that authorizes certain amounts to be deducted from their pay.After
payrolls are completed, the accounting staff then creates a single lump-

sum check representing the contributions of all employees, matches the

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