A payroll journal is the accounting entry that posts the financial result of a pay run into the general ledger - splitting the single net payment into the expense, liability and cash movements that actually occurred.
What it means
A pay run isn't one transaction from an accounting point of view - it is several. Gross salary expense, the employer's UIF and SDL cost, PAYE and UIF amounts owed to SARS, retirement fund amounts owed to a fund administrator, and the net cash paid to employees all need their own ledger lines, even though only one net amount actually leaves the bank account on payday.
Where it fits in
The payroll journal is what connects the payroll engine's calculated output to the company's financial statements. Without it, payroll costs would either be missing from the income statement or lumped together in a way that hides the statutory liabilities still owed to SARS and other third parties until they are actually paid.
Key rules
- Splits a single net pay run into separate expense, liability and cash entries - it is never a one-line transaction.
- Employer-only costs like SDL and the employer's UIF contribution are posted as expenses, not deductions from employee pay.
- Amounts owed to SARS or a fund remain as a liability on the balance sheet until actually paid over.
- Should reconcile exactly to the figures on the corresponding EMP201 and payslips for the period.
