Matching payroll payments in QuickBooks Online

Your payroll accounts affect how you record payroll expenses in journal entries. Matching these journal entries with your bank account transactions ensures your records are accurate.

Overview of default payroll settings

Payroll journals are assigned by the default accounts selected within the Employees tab. These settings ensure bank transactions are correctly reflected to credit the appropriate accounts.

To review your assigned accounts:

1. Go to the gear icon ⚙ icon and select Payroll Settings.
2. From Business Settings, select Chart of Accounts.
3. Select Default accounts to reveal the assigned accounts.

These chosen accounts match the payroll journals created when a pay run is completed and sent to QuickBooks Online.

Match payroll payments using a Clearing Account

If you use the default setup, you must manually add and match expense transactions.

Step 1: Match payroll payments

1. Go to All apps , select Accounting, then select Bank transactions (Take me there).
2. Select the bank account used for employee payments, then find and select the transaction.
3. From the Transaction type dropdown, select Expense.
4. From the Category dropdown, select the payroll account (e.g., Payroll Clearing).
5. From the GST dropdown, select the appropriate tax code (e.g., Out of Scope).
6. Select Confirm.

This creates a transaction that debits the bank account and credits the Payroll Clearing account. Repeat these steps if multiple bank line items make up a single pay run.

Step 2: Review your payments

The Payroll Clearing account should have a balance of zero after payments are added.

1. Go to the gear icon ⚙ and select Chart of accounts (Take me there).
2. Find the account name and select Account history.

Note: You can also add Super payments as an Expense using the Superannuation Payables account. Follow the same steps above to verify this account also has a zero balance.

Step 3: Add bank rules (optional)

Bank rules automate categorisation to speed up the review process.

1. Go to All apps , select Accounting, then select Rules (Take me there).
2. Select New rule.

Match journal transactions using a Bank Account

If you pay employees using ABA files (bulk payment files), you can change the default bank payment account to your bank account instead of the clearing account. This allows you to match payments directly without adding extra expenses to clear the clearing account.

1. Go to the gear icon ⚙ icon and select Payroll Settings.
2. Under Business Settings, select Chart of Accounts, then select Default Accounts.
3. Run your regular payroll.
4. On the Transactions screen, match the journal entry to the payment made.