A payroll journal records the cost of a run and what you now owe. Paying staff and the authorities comes later and clears those balances. The same structure works in QuickBooks and Business Central.
The rule of thumb
- Debit the cost to the business: salaries, plus employer contributions.
- Credit what’s owed: each authority, plus net pay owed to staff.
A worked example
Three Kenyan employees, paid 50,000, 30,000 and 50,000 gross.
| Account | Debit (KES) | Credit (KES) |
|---|---|---|
| Salaries & Wages | 130,000.00 | |
| Employer NSSF Expense | 7,800.00 | |
| Employer Housing Levy Expense | 1,950.00 | |
| NITA Levy Expense | 150.00 | |
| PAYE Payable | 12,422.95 | |
| NSSF Payable (employee + employer) | 15,600.00 | |
| SHIF Payable | 3,575.00 | |
| Housing Levy Payable (employee + employer) | 3,900.00 | |
| NITA Payable | 150.00 | |
| Net Pay Payable | 104,252.05 | |
| Total | 139,900.00 | 139,900.00 |
Employee deductions come to 25,747.95, which leaves 104,252.05 from the 130,000 gross. The employer’s cost is 139,900, which is why the journal balances on that figure.
Recording the payment
When the bank transfer or M-Pesa file goes out, post a second journal: debit Net Pay Payable and credit the bank account. If you make one line per payment file, it will match your bank feed. Remitting to KRA, NSSF and SHA clears each payable the same way.
Common mistakes
- Expensing the employee’s NSSF twice. Only the employer’s share is an extra expense. The employee’s share is already inside gross salary.
- One Statutory Payable account for everything. Keep one payable per authority, or you can’t see what’s outstanding to whom.
- Editing a posted journal by hand. Correct the run and repost, so payroll and the ledger stay in agreement.
See what TrendPro Payroll will do automatically on the Zoho Books integration page.