Companies use a payroll ledger to track employee salaries and compensation.
A payroll ledger is a method of recording pay information for each employee or contractor who receives funds from a company’s payroll department. While payroll books were once simple paper books with different columns for recording information, most companies now keep their payroll books on computers, using spreadsheets or more complicated payroll programs if necessary. . The advantage of using a payroll ledger is that it allows the employer or payroll employee to quickly see how much money has been paid and to which employee, and it often serves as backup documentation for tax purposes.
Smaller companies or individuals who need to pay employees will likely need to keep their own payroll ledgers.
Most larger companies will have a dedicated payroll department whose job it is to maintain the payroll ledger and ensure that all payments are accurate and made on time. Smaller companies or individuals who need to pay employees will likely need to keep their own payroll ledgers. It really doesn’t make a difference whether it’s done on a computer or on a paper ledger; some people simply find one method more comfortable and foolproof than the other, or they have learned one method and are reticent to try another. In most cases, there is no need to make the payroll ledger especially complicated.
It is useful for anyone who must use a payroll ledger to determine in advance how many columns will be needed. For a basic payroll ledger, most people start with a column for the employee’s name; another column for your title and status, such as full-time or part-time; and a third column for the pay period or number of hours in the pay period. The next column should include the gross paycheck amount, which is the pre-tax amount. The next two columns usually include deductions such as income tax or other deductions such as those made for benefits. The final column can then include the net amount of the final paycheck – what the employee actually takes home.
Other columns can be added as needed, but these are the most common additions to a payroll ledger. Each of the columns can then be balanced by adding them across and down, then making sure all the numbers match. Typically, companies balance their ledgers on a weekly or monthly basis, depending on the number of employees in the company and the complexity of the payroll ledgers. When tax time comes, they can be very useful for filing taxes or providing information to an accountant or tax preparer.