Generally, we have found that loaning money (cash) is not a good policy. We do encourage those that are short in funds to request selling excess vacation time back to the company. We do encourage our employees to purchase tools thru the company purchasing department. These amounts are setup on the balance sheet as an asset classified as "employee receivables". Every week a deduction is taken out of the employees paycheck and taken off of employee receivables.
We have found that the accounting works real good for the CPA to finalize their numbers at the close of the year. One final note is that we do not allow the employee receivables to accumulate larger that the employees weekly pay.

We loan our employees money quite regularly and it seems to be the same 10 or 12 guys over and over.   I used to play havoc keeping control, but a few yrs ago I came up with this:  
I have created venders such as:
                                       emplo-Smit                                            
                                       emplo-Jone
& I have created GL accts such as:
                                       29900-2012  (Smiths emp#)
                                       29900-3017   (Jones  emp#)
 
When I loan Jones money I go to AP and enter a voucher choosing  his specific vendor, and code it out to his specific GL acct.      Yes this makes for longer statements but I no longer get confused.
 
We use an outside payroll service, but I think this would work even if you used DBA payroll.    
 
I am always amazed when a guy that makes 50k or 60K a yr asks for power bill money or money to fix his transmission.  I have thought about  not loaning money, but I guess I am too soft.   I have been doing this 26 yrs.  Its just a part of the job.
 
Also we just started a NEW POLICY (after an employyee told my husband he needed the money for one thing and used it on something else).   We no longer write checks to Smith or Jones.  We now got into AP-A and change  empl-smit  name to Alabama Power Co.   or Amoco Transmission.    
(The vendor code is still emplo-smit, the name just changes on a regular basis)
 
This NEW POLICY has cut down loans by over 50% ! ! !
One guy that has been getting 6 or 7 loans a year has stopped totally!

As an accountant, what difference does it make what they are spending the money on??  You're kidding yourself if you don't think they'll have you pay the power bill while they use their own money to pay the gabmling debt, bar tab or whatever .  You don't ask them how they spend their regular paycheck do you??
 
As for the loaning part, I think your key word was "soft".  Keep in mind that banks make all their money by loaning out cash to folks that ask, and they get a hansome reward usually called "interest" .  Shoot, there's even an entire industry based on the fact that some folks can't seem to make it from paycheck to paycheck, and their interest rates make the bankers look like saints.  I'll bet you're not charging your employees for the priviledge of using your money, or worse yet, the company's owners money!
 
I know that sounds fairly hard-nosed, but keep in mind what you are in business for.  If you did so well at loaning money, why aren't you a bank? (And I'd assume that a bank really wouldn't be using DBA!)  We've had instances in the past where someone had a catastrophy of some sorts and we'd loan tham money to cover major car reapir after an accident or medical bills after a heart attack, but I can't imagine paying power bills for 10-12 people.
 
BTW, on those rare occassions that the ogre accountant (i.e. me   ) lets loose of a loan, we do the employee receivable entry and then set them up on a deduction schedule in DBA to take a little bit out of several paychecks.  

Our company also makes loans to employees (mostly the family members) but they are charged 8% interest. I have a user-defined account MISC PAYROLL DEDUCTIONS. I then transfer the deduction to us as a vendor, I then do a credit voucher to Emp loan acct (asset) and also interest income acct and then apply the credit to balance the account. I use a specific block of numbers for the check run (beginning w/#900). It is extra work, but how do you tell the president of the company to teach is kids how to pay there bills ???
Ragine

Cyndee, I had thought about not transferring liability or maybe it could be done on a quarterly or annual basis.
 
On another note:  if our employees were making $50-60K a year then I'm sure we wouldn't be advancing to employees.  Although, I believe that $50-60K is probably not enough for people that live in major cities.  It's kinda all relative to your location.

Same here.  We do not transfer p/r liabilities.  We do limited advances, usually less than the p/r check.  We do allow the advances over a period of time 2-4 weeks, depending on the amount.  We write the a/p check to the employee, charging to an asset account.  It is relieved through the payroll transaction.
 
For items that are longer than one pay cycle, you can use the p/r user defined deduction and set the annual limit and each pay period deduction amount for the employee.  Need to change the limit each time an advance is made to the employee.  That way, when the limit is reached, it is no longer deducted and we don't have to worry about keeping track of it manually.