Posting Payroll Entries – Part 1

This series of blogs will look into the various ways you can recognize your payroll costs in your bookkeeping platform.

If you subscribe to a separate 3rd party payroll provider that is NOT integrated into your bookkeeping platform, then you will have to post the payroll expenses into your financials yourself.

There are certainly different ways you can go about this, depending really on your financial reporting needs each month.

For example, if you process a payroll that does NOT include any type of health care or retirement benefits, then a simple payroll entry into your bookkeeping platform can look like this:

Debit: Payroll Wages

Debit: Employer Taxes

Credit: Cash (Bank Account)


This kind of entry can be sufficient for the following reasons:

  1. The 3rd party payroll provider ALSO is collecting all future tax payment liabilities at the time of this payroll. Therefore it is your 3rd party payroll provider that will be paying payroll tax obligations at a future date from these pre-collected moneys.
  2. If you do not want to recognize any specific types of payroll wage costs, such as for:
    1. Officers
    2. Different Departments within your company
  3. If your 3rd party payroll provider is NOT still mailing out check payments to any of your employees.
  4. If you, as the small business owner, are really overall just not concerned about any potential accruals.

Be aware that “Employer Taxes” are only from the following:

  1. Employer paid FICA & Medicare payroll taxes; NOT the corresponding ones deducted from employee gross wages.
  2. Employer paid state taxes, such as for Unemployment Insurance.

Overall, it is always a good idea to reconcile your payroll summary report to your profit and loss report each month to ensure the wages and employer payroll taxes match.


Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.


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