Quick answer: Payroll entries typically record (1) gross wages expense, (2) amounts withheld from employees (payables), (3) employer payroll taxes/benefits (expense + payables), and (4) cash paid to employees and to third parties. Many teams also post a period-end accrual for wages earned but not yet paid.
Payroll — journal entries (quick examples)
1) Accrue wages at period-end (earned, not yet paid)
| Account | Debit | Credit |
|---|---|---|
| Wages expense | XXX | |
| Wages payable (accrued payroll) | XXX |
2) Payroll run (gross to net) — record wages + withholdings + net pay
| Account | Debit | Credit |
|---|---|---|
| Wages expense (gross) | XXX | |
| Payroll withholdings payable | XX | |
| Employee benefits payable (if withheld) | XX | |
| Cash / bank (net pay) | XXX-XX-XX |
3) Employer payroll taxes / benefits — record employer portion
| Account | Debit | Credit |
|---|---|---|
| Employer payroll tax expense | XX | |
| Employer benefits expense | XX | |
| Employer payroll taxes payable | XX | |
| Employer benefits payable | XX |
4) Remit withholdings and employer amounts
| Account | Debit | Credit |
|---|---|---|
| Payroll withholdings payable | XX | |
| Employer payroll taxes payable | XX | |
| Benefits payable | XX | |
| Cash / bank | XX+XX+XX |
5) Bonus accrual (period-end)
| Account | Debit | Credit |
|---|---|---|
| Bonus expense | XX | |
| Bonus payable | XX |
6) Bonus payment
| Account | Debit | Credit |
|---|---|---|
| Bonus payable | XX | |
| Cash / bank | XX |
Table of Contents
Accruing payroll at period-end
If employees have earned wages by the reporting date but payday falls after the reporting date, you may accrue the earned wages to match expense to the period worked.
Gross-to-net payroll entry
The gross-to-net entry records total wages expense and sets up payables for amounts withheld from employees. The remainder is the net cash paid to employees.
Employer taxes and benefits
Employer obligations are separate from employee withholdings. They are recorded as expenses and corresponding payables when incurred.
Remittances
When you remit withheld and employer amounts, you reduce the related payables and reduce cash.
Bonuses (accrual + payment)
Bonuses are commonly accrued when earned/approved and paid later, creating a payable until settlement.
Payroll journal entry FAQ
What is the journal entry for payroll?
At a high level: debit wages expense, credit payables for withholdings, and credit cash for net pay.
Where do payroll deductions go?
Deductions withheld from employees are typically recorded to a payable until remitted or paid (for example, withholdings payable or benefits payable).
Are employer payroll taxes an expense?
Yes. Employer payroll taxes and employer-paid benefits are generally recorded as expenses, with a corresponding payable until remitted.
What’s the difference between wages payable and payroll withholdings payable?
Wages payable is the net amount owed to employees. Withholdings payable represents amounts deducted from employees that you owe to third parties.
Do you need to accrue payroll at month-end?
Many companies do if the accrual is material and employees have earned wages not yet paid at period-end.
How do you record a bonus?
Accrue bonus expense with a bonus payable when earned/approved, then debit the payable and credit cash when paid.
