A payroll journal entry is a method of recording expenses in the accounts book of your restaurant pertaining to employee compensation.

A payroll journal record incorporates employee salary, direct labour expenses, FICA expenses, payroll taxes, and holiday, vacation and sick days in the Debit segment. Other particulars may be specialized payroll alternatives, such as a 401k plan. The Credit segment incorporates FICA taxes, state withholding taxes, federal withholding taxes, social security taxes, and Medicare taxes. Other particulars may be federal unemployment taxes and state unemployment taxes.

Let us look at the following payroll journal example:

This is an example of a bi-weekly payroll journal extracted from Paychex.

This is the Payroll Journal to be entered in QBO based on the above report:

Please note that we can categorize the salary into separate departments like managerial staffs, Kitchen staffs, Drivers etc. Department wise classification will help us analyse the departmental performance and fill up the gaps.

Most of the payroll liabilities except few, in this case, PA LSOUF-Fra T and PA SHAMT- Fra T will be paid directly by Paychex to the respective government bodies.

PA LSOUF-Fra T and PA SHAMT- Fra T are the employee benefits, in this case, they are health insurance premiums and Paychex will not pay this amount to the concerned authority. The restaurant owner will have to pay this directly to the insurance service provider. Do refer to the screenshot of the Paychex report where it is stated that Paychex will not remit these. In this case, the insurance service provider was United Healthcare and the client made the payment directly to the company. The transaction will be recorded as given below:

Note – Cash tips do not affect the payroll journal. In this case, tips are paid out in CASH and not with the bi-weekly payroll. It is just recorded on the payroll journal as additional information. This will later help us reconcile the tips payable account.