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A payroll ledger is a method of recording the payment information for each employee or contractor who receives funds from a company's payroll department. Though payroll ledgers were once simple paper ledgers with different columns for recording information, most companies now keep their payroll ledgers on computers, using spreadsheets or more complicated payroll software programs if needed. The benefit of using a payroll ledger is that it allows the employer or payroll employee to see at a glance the amount of money that was paid out and to which employee, and it typically serves as backup documentation for tax purposes.
Most larger companies will have a dedicated payroll department whose job it is to maintain the payroll ledger and make sure that all payments are accurate and made on time. Smaller companies or individuals who need to pay employees will likely need to maintain payroll ledgers themselves. It really makes no difference whether it is done on a computer or on a paper ledger; some people just find one method more comfortable and mistake-proof than the other, or they 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 helpful for someone who must use a payroll ledger to determine ahead of time how many columns will be needed. For a basic payroll ledger, most people begin with one column for the employee's name; another column for his or her job title and status, such as full- 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 amount of the paycheck, which is the amount before taxes. The next two columns typically include deductions, such as income tax or other deductions, such as those taken 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 necessary, but these are the most typical inclusions on a payroll ledger. Each of the columns can then be balanced by adding them across and down, then making sure the figures all match up. Companies typically 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 helpful for filing taxes or for providing information to an accountant or tax preparer.