Payroll Reconciliation
Short answer
Payroll reconciliation is the process of confirming that the amounts recorded in the bookkeeping system for wages, taxes, and deductions match the payroll reports and actual payments for a given period.
Why it matters
Payroll involves gross wages, tax withholdings, employer taxes, and net pay — each of which needs to land in the right place. Reconciliation confirms the payroll records are accurate and that nothing is missing or duplicated.
How it works
After each payroll run, the totals in the bookkeeping system are compared against the payroll reports. Gross wages, tax withholdings, employer taxes, and net pay are each verified. Discrepancies are corrected before the period is closed.
A simple example
A payroll report shows $8,000 in gross wages, $1,500 in withholdings, and $700 in employer taxes. Payroll reconciliation confirms the bookkeeping entries match all three of those figures exactly.
Related terms
Related service
Payroll Support
When you may want help
If payroll is being run but the bookkeeping side is not being reconciled, or the wage and tax figures do not match, payroll support can bring the records into alignment.
Written and reviewed by Rachel Armstrong, owner and bookkeeper at Armstrong Quality Financial Services. QuickBooks Online Level 1 ProAdvisor. This entry explains a general concept and is not individualized tax, legal, or investment advice.
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