Payroll transactions are recorded using two journal types:
Payroll Control Journal – records payroll costs and posts them to the Payroll Control Account.
Payroll Payment Journal – records payments made from the bank to clear balances on the Payroll Control Account.
Both journals are required to ensure payroll is accurately reflected in the general ledger and bank reconciliation.
Payroll Control Journal
The Payroll Control Journal is used to post payroll costs to the Payroll Control Account.
This journal credits the Payroll Control Account with:
salary costs.
National Insurance (NI)
pension contributions.
any applicable benefits.
The Payroll Control Journal can be entered at any point during the month.
To add a Payroll Control Journal
Go to Transactions.
Click Journals.
Select Payroll Control Journal.
Enter the relevant journal details.
Add a debit line for each payroll cost (for example, salary, pension, or NI).
Click Submit.
The payroll costs will now be recorded, and the total value will be credited to the Payroll Control Account.
Payroll Payment Journal
The Payroll Payment Journal is used to record payments made from the bank account against the Payroll Control Account.
Payments should be entered as and when they are made, allowing multiple payments to be recorded separately if required.
Example
If payroll costs are paid on different dates (for example, salaries on the 28th and pension contributions on the 15th), separate Payroll Payment Journals should be entered for each payment.
To add a Payroll Payment Journal
Go to Transactions.
Click Journals.
Select Payroll Payment.
Select the relevant payment details.
Enter the payment amount.
Click Submit.
Bank reconciliation
Once Payroll Payment Journals have been submitted:
The payments will appear on the bank reconciliation screen.
The balance on the Payroll Control Account will reduce as payments are reconciled.
This ensures payroll costs and payments are correctly matched and fully accounted for before period end or year end processing.