The general ledger is the complete set of accounts a business uses to record every financial transaction, organised by account type - assets, liabilities, equity, income and expenses.
What it means
Payroll is one of the largest and most frequent sources of entries into the general ledger for most businesses, recurring every pay cycle rather than as occasional transactions. Getting the payroll-to-ledger mapping right matters because it directly affects the accuracy of the income statement (salary expense) and balance sheet (statutory liabilities still owed).
Where it fits in
Each pay run's payroll journal posts into the general ledger, updating salary expense accounts, statutory liability accounts for amounts owed to SARS and funds, and the cash account for the net amount actually paid out. Accurate posting here is what lets the business's financial statements reflect payroll costs and obligations correctly at any point in time, not just on payday.
Key rules
- Receives a payroll journal entry every pay run, not just at month end.
- Statutory liability accounts (PAYE, UIF, SDL owed) should clear only when the EMP201 payment is actually made.
- Salary expense in the ledger should reconcile to gross remuneration across all pay runs in the period.
- Misposted payroll journals are a common source of balance sheet discrepancies in small business bookkeeping.
