How to Make a Payroll Journal Entry

bizfluent article image

Minerva Studio/iStock/Getty Images

An accounting journal is a record of the company’s accounting transactions as they occur. A journal entry is a line in that record. Accounting transactions include payroll entries of total wages and salaries paid to employees, total deductions, and the employer’s tax liabilities. Payroll software often allows you to make the journal entry in the system. Otherwise, you can make your own journal via a spreadsheet or office suite program. A payroll journal entry is a two-stage process.

Payroll Entry

Enter the payroll date. The payroll date for a monthly payroll, for example, is March 31. Create headings for Account, Debit and Credit.

Type Salaries and Wages under the Account heading. Put the total gross amount -- the amount paid to employees before deductions -- under Debit.

List the respective deductions in the Account section, under Salaries and Wages. For example, create rows for federal income tax, state income tax, local income tax, city income tax, 401(k) contributions and other deductions. Enter the total withheld for each deduction as a Credit.

Create a final row for Payroll Account under the Account section. Put the total net payroll -- total Debit minus total Credits -- as a Credit.

Employer Liability Entry

Create headings for Account, Debit and Credit.

Generate rows for employer taxes under Account. In most cases, the employer pays Medicare tax, Social Security tax, federal unemployment tax and state unemployment tax. Enter the total amount for each tax as a Debit.

Make a final row for Payroll Account under the Account section. Put total payments remitted as a Credit -- this amount should equal the total Debits applied in Step 2.


  • Make payroll journal entries after you process each payroll. If you use a manual payroll system which requires you to process the payroll by hand, purchase the journal from an office supply store and make the entries manually.