Payroll is an essential task that takes up a considerable portion of a company’s revenue. To monitor your payroll expenses, you make journal entries in your company’s payroll journal. Such expenses include the wages you pay your employees for each pay period. When documenting wages, consider the pay period date, total wages, your employees’ paycheck deductions and the pay date.

Step 1.

Enter the pay period end date under the “date” column. Because hourly employees are generally not paid current, the pay period end date would come before the actual pay date. At this point, enter only the pay period end date.

Step 2.

Create an account name for wages. If you have multiple departments and want to show the amount of wages that pertains to each, create separate account names. For example, you could establish different accounts for your warehouse, personnel and accounting departments. Or you may simply lump all wages under one account.

Step 3.

State the total wage expenses for the pay period as a debit under the “debit” column.

Step 4.

List the types of deductions made from your employees’ paychecks for the pay period and the respective amounts as credits under the “credit” column. Deductions may include federal income tax, Social Security tax, Medicare tax, state income tax, wage garnishments, and contributions for health insurance and 401(k) plans. These deductions are all payable until you remit the payments to the respective government agencies and vendors.

Step 5.

Record your total net payroll payable as a credit. This amount should equal your total credits subtracted from your total debit. In other words, total wages minus total deductions equal your net payroll payable, which will be paid on the upcoming payday.

Step 6.

Enter your net payroll payable amount on payday, under the actual pay date, as a debit.

Step 7.

Offset your net payroll payable amount as a credit to your cash account.


Make separate journal entries to record your share of liabilities and your employees’ deductions once payment has been remitted. Under the actual pay date, record the individual entries as debits, then offset the total debits as a credit to your cash account.