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How to Create Payroll Journal Entries in QuickBooks

Why you need payroll journal entries

If you run payroll through a provider like Gusto, ADP, or Paychex, you get a summary report after each pay run. That report tells you the totals: gross wages, taxes withheld, employer contributions, net pay. What it does not give you is a journal entry.

Without a journal entry, those payroll costs never hit your general ledger in QuickBooks. Your P&L will be wrong, your balance sheet will be off, and your trial balance will not tie out. Every bookkeeper who handles payroll needs to turn that report into a proper journal entry.

What goes into a payroll journal entry

A payroll journal entry records the accounting impact of a pay run. It covers four categories:

  • Gross wages - the total compensation before any deductions. This is an expense (debit).
  • Employer payroll taxes - the employer's share of FICA (Social Security and Medicare), FUTA, and state unemployment. These are expenses (debits).
  • Employee withholdings - federal income tax, state income tax, and the employee's share of FICA. These are liabilities you owe on behalf of the employee (credits).
  • Net pay - the amount deposited into employee bank accounts. This reduces your cash account (credit).

The debits (expenses) must equal the credits (liabilities + cash). That is what makes the entry balanced.

Step-by-step: creating the journal entry in QuickBooks Desktop

  1. Open QuickBooks Desktop and go to Company > Make General Journal Entries.
  2. Set the date to the pay date (or the last day of the pay period, depending on your accounting method).
  3. On the first line, select your Salary/Wages Expense account. Enter the gross wages amount in the Debit column.
  4. On the next lines, add your employer tax expense accounts (FICA Expense, FUTA Expense, SUTA Expense) with their amounts in the Debit column.
  5. Now add the liability lines. Select Federal Tax Payable and enter the federal withholding amount in the Credit column.
  6. Add State Tax Payable, FICA Payable (both employee and employer shares combined), and any other withholdings as credits.
  7. On the last line, select your Cash/Checking account and enter the net pay amount in the Credit column.
  8. Verify the entry is balanced: total debits should equal total credits.
  9. Add a memo (something like "Payroll JE - Jan 15 2026") and save.

Step-by-step: creating the journal entry in QuickBooks Online

  1. Go to + New > Journal Entry.
  2. Set the journal date and add a journal number if you use one.
  3. In the first row, pick your wages expense account. Enter the gross wages in the Debits column.
  4. Add rows for each employer tax expense, entering amounts in the Debits column.
  5. Add rows for each liability (federal tax payable, state tax payable, FICA payable), entering amounts in the Credits column.
  6. Add a final row for your checking account with the net pay amount in the Credits column.
  7. Check that the totals at the bottom match. QBO will not let you save an unbalanced entry.
  8. Save and close.

A concrete example

Say you run a biweekly payroll with these totals:

  • Gross wages: $8,000
  • Federal withholding: $1,200
  • State withholding: $400
  • Employee FICA: $612
  • Employer FICA: $612
  • FUTA: $48
  • SUTA: $72
  • Net pay: $5,788

The journal entry looks like this:

  • Debit: Salary Expense - $8,000
  • Debit: FICA Expense - $612
  • Debit: FUTA Expense - $48
  • Debit: SUTA Expense - $72
  • Credit: Federal Tax Payable - $1,200
  • Credit: State Tax Payable - $400
  • Credit: FICA Payable - $1,224
  • Credit: FUTA Payable - $48
  • Credit: SUTA Payable - $72
  • Credit: Cash - $5,788

Total debits: $8,732. Total credits: $8,732. Balanced.

Common mistakes to avoid

  • Mixing up employee and employer taxes. The employee's FICA withholding is a liability (you already counted it as part of gross wages expense). The employer's FICA is an additional expense. They are both owed to the IRS, but they hit different sides of the entry.
  • Forgetting employer-only taxes. FUTA and SUTA are employer expenses that are easy to miss because they do not appear on the employee's pay stub.
  • Using the wrong date. Post the journal entry as of the pay date or period end date, not the date you are entering it. Backdating keeps your P&L accurate for the correct period.
  • Not reconciling to the payroll report. After you enter the journal entry, compare each line to the payroll provider's report. Every number should match exactly.

A faster way

Building payroll journal entries by hand works, but it is slow and error-prone. If you do this for multiple clients every pay period, consider using PostBooks. Upload your payroll CSV or PDF, map the line items to your chart of accounts once, and get a balanced journal entry you can import directly into QuickBooks Desktop (IIF) or QuickBooks Online. It takes minutes instead of an hour.

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