What is a Payroll Journal? Explained in Plain English

Not sure what a payroll journal in accounting is or if you even need one? You’re not alone. Whether you’re just hiring your first employee or already juggling payslips and taxes, this guide breaks it down in plain English so you can stay compliant and stress-free.

Key Takeaways

• A payroll journal tracks what you pay employees, what you deduct (like tax and pensions), and what your business owes, all in one place.

• It keeps your payroll accurate, organised, and HMRC-compliant, helping you avoid costly mistakes down the line.

What is a Payroll Journal?

A payroll journal is a record used to track all the money that goes in and out of your business related to employee pay. 

It shows how much each employee earned (gross pay), what was taken out (like tax and National Insurance), and what they actually received (net pay). It also includes what the employer owes like employer NI or pension contributions.

Why Does It Matter for Small Businesses?

Keeping a payroll journal isn’t just good bookkeeping. It protects your business.

It helps you track exactly what you’re paying staff, what you owe in taxes or pensions, and what’s already been paid. Without it, it’s easy to lose track or misreport something.

That might not seem like a big deal now, but come year-end, or if HMRC ever asks questions, it can quickly become a costly mess. A payroll journal keeps your payroll clear, accurate, and stress-free.

Feeling unsure about your payroll setup? Mistakes here can cost you later. Book a QUICK FREE CALL with our professional accountants, and we’ll take a look and tell you what’s working, what’s not, and how to fix it. 

What Does a Real Payroll Journal Look Like?

A payroll journal looks like a simple table, usually created by your payroll software, which shows all the key details of each payroll run.

It typically includes:

• The employee’s name

• Their gross pay (before any deductions)

• Deductions like income tax (PAYE), National Insurance, and pensions

• The net pay (what they actually receive)

• Employer costs like your share of NI or pension contributions

• Total amounts owed to HMRC and pension providers

Each row represents an employee. Each column breaks down where the money goes to the employee, the government, or other parties. This is your typical payroll journal example, and payroll journal entries are usually auto-generated by most accounting software.

You don’t need to create it manually. Just knowing what it includes helps you understand how your payroll is tracked behind the scenes.

What We Think

Payroll journals don’t get much attention until something goes wrong. In our experience, skipping them or getting them wrong can lead to messy books, surprise tax bills, or HMRC headaches.

They don’t need to be complicated, but they do need to be accurate. A solid payroll journal helps you stay in control, spot issues early, and avoid stress later.

If you’re paying staff or planning to grow, this is one detail worth getting right from the start.

How JAFA Can Help

We make payroll journals easy. At JAFA, we handle the setup, the tracking, and all the small but crucial details, so your books stay clean, accurate, and ready for anything HMRC throws your way.

No software headaches. No late-night number crunching. Just payroll done right, every time.

If you’ve been winging it, hoping it all adds up, let’s fix that. Book a FREE CALL with our expert accountants and get clarity in 15 minutes or less.