Payroll ledger: What it is and how it works, plus free template)

Managing payroll is an important part of running any business and a smart way for solopreneurs and small business owners to stay on top of finances. That’s where a payroll ledger comes in. It’s a simple yet powerful tool that helps you keep track of employee pay.

At its core, a payroll ledger is a central record of key details like wages, salaries, overtime, bonuses, deductions, and tax withholdings. Think of it as the backbone of your payroll system, giving you a clear framework to organize and manage all your payroll data. 

According to a QuickBooks Small Business Insights survey, only 44% of small business owners planned to give pay raises over the following three months—down from 50% a year earlier, showing how tight margins affect payroll decisions.

In this guide, we’ll show you how to create and use a monthly payroll ledger, explore the benefits, and explain how payroll software like QuickBooks can help you automate the process.

Jump to:

• What is a payroll ledger?
• How to create a payroll ledger
• How to use a payroll ledger template
• Automating payroll ledgers
• Benefits of using a payroll ledger
• Next steps for streamlining your payroll process

What is a payroll ledger?

A payroll ledger is a system for keeping track of payment information for each employee or contractor who receives payroll payments. Businesses can use paper or digital spreadsheets to quickly see their payroll expenses, who they’ve paid, and when.

In addition to being essential for payroll accounting, these ledgers may also serve as important documentation for tax purposes and other record-keeping needs. Like other general ledgers, a payroll ledger aims to keep all relevant information conveniently in one place. It’s also a solution to ensure you don't lose valuable data as your business scales.

Payroll ledgers can be useful for business owners in several ways:

• Keeping managers and business owners on top of necessary employee information.
• Making information easily accessible.
• Tracking payroll expenses in one place.
• Organizing important tax information.

When running a small business, keeping your payroll information well organized is essential for balancing monthly budgets.

What is a payroll journal?

A payroll journal is another payroll record that lists all transactions related to employee pay for a given accounting period. It’s more detailed than a ledger and typically used for bookkeeping and reconciliation.

How payroll ledgers differ from timesheets

A payroll ledger tracks pay information for multiple employees in one place, making it easy to manage overall payroll costs. In contrast, timesheets usually record a single employee's hours worked and pay, and they often feed into payroll ledgers to help you calculate pay.

How to create a payroll ledger

Creating your own payroll ledger is simple, and it can be done in just a few steps. Here’s what you’ll need to get started:

• Spreadsheet software: Microsoft Excel and Google Sheets are popular options
• Employee data: List your employees and contractors and their personal information
• Payroll information: This includes invoices and pay stubs for employees

Once you’ve put together all the necessary information, knowing how to make a payroll ledger is as simple as following these steps:

1. Open a new worksheet using your spreadsheet software. Be sure to name it something intuitive and searchable, like “2025_Payroll_Ledger.” It’s also a good idea to store it in a clearly named folder, like “Payroll Information.”
2. Name the first column “Employee Name.”
3. Name the next column “Employee ID Number.” You can skip this step if you do not use employee ID numbers. (Note: You may also want to include a column with basic contact information, like an email or phone number.)
4. Create a series of columns that reflect the different pay information that may apply. For example, this might include “Hourly Rate,” “Rate Per Word,” or “Overtime Rate.” Be sure each has its own column.
5. Create more columns titled “Net Pay” and “Gross Pay.”
6. After you’ve finished setting up your payroll spreadsheet, be sure to save it. Then, start inputting the correct information into each cell.

How to use a payroll ledger template

Learning how to do payroll yourself can be quick and easy when you have a template. Using a template, you can avoid having to build your own payroll ledger system from scratch.

Here’s what to include when making your payroll ledger:

• Employee name: The designation or title of a wage-earner within the organization.
• Employee ID number: A unique numerical identifier assigned to each employee for tracking and administrative purposes.
• Salary: The fixed amount of money paid to an employee on a regular basis, typically annually or monthly, regardless of hours worked.
• Hourly rate: The compensation an employee earns for each hour of work performed.
• Overtime rate: The additional compensation paid to an employee for hours worked beyond the standard full-time hours, typically higher than the hourly rate.
• Gross pay: The total amount of money earned by an employee before deductions, including salary, hourly wages, overtime pay, and bonuses.
• Tax withholdings: The deductions taken from an employee's gross pay, such as taxes, insurance premiums, and retirement contributions.
• Net pay: The amount of money an employee receives after all deductions and withholdings have been subtracted from their gross pay.

This template makes it easy to input and customize information as needed, so feel free to build out your payroll ledger to suit your business’s needs.

To use the template, follow these simple steps:

• Input the information above into each column of the spreadsheet.
• Enter each employee in their own row under the employee name column.
• Fill out the information for each column in the payroll ledger
• Be sure to double-check your work.

You can then keep the ledger on hand for accounting and bookkeeping, tax preparation, business forecasting, and payroll schedule planning.

Automating payroll ledgers

While payroll ledgers are a useful way to track and manage your employees’ pay, as a business owner, there are also other options. By automating payroll, you can keep tabs on employee pay, withholdings, gross pay, and net pay much more efficiently.

Accounting software like QuickBooks Online allows small business owners to automate financial processes quickly. Automating data entry means you don’t have to worry about input errors, and your employees can allocate that time to other tasks. 

By automating the technical aspects of your employee payroll, you can ensure that your team is paid on time and in the correct amount. Plus, all the information you need to file small business taxes will be in one place, ready to import into your business tax software.

Benefits of using a payroll ledger

A payroll ledger has many advantages for solopreneurs and smaller businesses. The benefits of ensuring that you’re paying your employees fairly and in full, and all your payroll details are in one place come tax time, are extensive. 

Here are the advantages of using a payroll report template:

• Accuracy: Helps accurately calculate employee compensation, deductions, and taxes.
• Organization: Provides a structured framework for maintaining payroll records.
• Compliance: Facilitates adherence to labor laws, tax regulations, and reporting requirements.
• Transparency: Offers transparency into payroll expenses for financial reporting and analysis.
• Efficiency: Streamlines payroll processes, saving time and resources.
• Centralization: Serves as a centralized repository for all payroll-related information.
• Analysis: Enables analysis of payroll data for insights into labor costs and trends.
• Archives: Facilitates comprehensive record-keeping for auditing and reference purposes.

Whether you run a small business just starting out or an established business ready to expand, a payroll ledger template is an invaluable tool. 

Why using a payroll template matters

Using a payroll template ensures your records are accurate and compliant. It also saves time by eliminating the need to build payroll documents from scratch, so you can focus on running your business.

Next steps for streamlining your payroll process

Managing a payroll ledger is a smart way to keep your payroll organized, ensure compliance, and gain clearer insights into your company’s financial health. But manual tracking can take time and leave room for errors.

That’s where payroll software can help. With automation, you can simplify data entry, reduce mistakes, and make sure your team gets paid accurately and on time—freeing you up to focus on growing your business.

*QuickBooks Online Payroll & Contractor Payments: Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services, subject to eligibility criteria, credit, and application approval. For more information about Intuit Payments Inc.’s money transmission licenses, please visit https://www.intuit.com/legal/licenses/payment-licenses