Bookkeeping · Payroll & Compliance · Brief · Working level
Payroll journal entries: the complete set
The four entries every payroll run produces — gross wages and withholdings, employer taxes, tax deposits, and benefit remittances — with balanced examples of each.
Every payroll run generates the same four entries, in the same pattern, forever. Learn the pattern once and payroll stops being mysterious: expense equals gross wages plus employer taxes; everything withheld is a liability; cash goes out later, in pieces, as each liability is paid.
Entry 1: wages and withholdings, at payday
| Account | Debit | Credit |
|---|---|---|
| Wages expense | 10,000 | |
| Federal income tax withheld payable | 1,100 | |
| Social Security/Medicare withheld payable | 765 | |
| State income tax withheld payable | 300 | |
| 401(k) deferrals payable | 400 | |
| Health premiums withheld payable | 235 | |
| Cash — net pay | 7,200 |
Illustrative amounts. The debit is gross; the credits are everyone gross belongs to.
Entry 2: employer taxes, at payday
| Account | Debit | Credit |
|---|---|---|
| Payroll tax expense | 965 | |
| Social Security/Medicare payable — employer | 765 | |
| FUTA payable | 40 | |
| SUTA payable | 160 |
Only employer-side taxes hit this expense. Rates and wage bases are in IRS Publication 15 and your state's unemployment notices.
Book this at the same time as Entry 1 so the expense lands in the right period even though the cash leaves later.
Entry 3: the federal tax deposit
On your deposit schedule (see /bookkeeping/payroll-compliance/payroll-deposit-schedules), the EFTPS deposit clears the federal liabilities:
| Account | Debit | Credit |
|---|---|---|
| Federal income tax withheld payable | 1,100 | |
| Social Security/Medicare withheld payable | 765 | |
| Social Security/Medicare payable — employer | 765 | |
| Cash | 2,630 |
No expense here — the expense was recognized at payday. This entry only pays the debt.
State withholding, SUTA, and FUTA deposits follow the same pattern on their own schedules.
Entry 4: benefit remittances
| Account | Debit | Credit |
|---|---|---|
| 401(k) deferrals payable | 400 | |
| Health premiums withheld payable | 235 | |
| Cash | 635 |
Employee 401(k) deferrals must reach the plan promptly under Department of Labor rules — do not let this liability age.
If the employer also matches the 401(k) or pays a share of premiums, that piece is a separate debit to benefits expense when incurred.
How to check your work
- Confirm P&L payroll cost = gross wages + employer taxes + employer benefit share. Nothing else.
- Confirm each liability account hits (near) zero after its remittance cycle. A growing balance means something isn't being paid — the worst version of that problem is unpaid trust fund taxes, which create personal exposure (/irs-controversy/trust-fund-recovery-penalty).
- Tie the quarter's accrued liabilities to the 941 before filing — see /bookkeeping/payroll-compliance/form-941-basics.
For the conceptual walk from gross to net that these entries encode, start at /bookkeeping/payroll-compliance/payroll-gross-to-net.
Frequently asked questions
- What journal entries does a payroll run require?
- Four: (1) debit gross wages expense, credit each withholding liability and net pay; (2) debit payroll tax expense, credit employer tax liabilities; (3) debit the tax liabilities and credit cash when deposits are made; (4) debit the benefit liabilities and credit cash when premiums and retirement contributions are remitted. Total payroll expense is gross wages plus employer taxes only.
- Are employee tax withholdings an expense to the employer?
- No. Withheld income tax and the employee shares of Social Security and Medicare are part of gross wages — already expensed — and are booked as liabilities until remitted. Only the employer's own taxes (its Social Security and Medicare match, FUTA, and SUTA) are an additional payroll tax expense.
- Why doesn't my payroll expense match what left the bank?
- Cash leaves in pieces on different days: net pay at payday, tax deposits on your deposit schedule, benefit remittances on the vendors' schedules. Expense is recognized once, at the payroll run, as gross wages plus employer taxes. The timing gap between them sits in the payroll liability accounts.