1. Why Payroll Entries Matter

Payroll isn’t just about paying people — it’s one of the largest, most complex journal entries your books will see.
Each pay run represents money moving in and out of several accounts:

• Gross wages and salaries
• Employer CPP and EI contributions
• Employee deductions (CPP, EI, and income tax withheld)
• CRA remittances payable
• Net pay to employees

If these aren’t posted correctly, your profit and loss and balance sheet will both be misleading — especially around tax time.

2. Using Wagepoint or Another Payroll Platform

If you run payroll through Wagepoint, QuickBooks, or another provider, that system does the math — but you still need to mirror the results in QuickBooks.

The best practice is to record each pay run as a journal entry showing:

• Debit to Wages Expense (gross pay)
• Debit to Employer CPP and EI Expense
• Credit to CPP Payable
• Credit to EI Payable
• Credit to Income Tax Payable
• Credit to Wages Payable (for the net pay amount)

If you pay employees directly from Wagepoint, you can also let the bank feed reflect that payment — just be sure it’s matched to the same Wages Payable account so it clears cleanly.

3. Setting Up Your Chart of Accounts

Create separate liability accounts for each payroll deduction type:

• CRA – Income Tax Payable
• CRA – CPP Payable
• CRA – EI Payable
• Wages Payable (Net Pay)

This separation makes your year-end reconciliation simple and helps you verify that each remittance to CRA zeroes out the correct balance.

4. Recording CRA Remittances

When you send your monthly or biweekly payment to CRA, record it as a payment against those liability accounts.

For example:
If your CRA remittance covers $1,200 in Income Tax, $300 in CPP, and $150 in EI, your journal entry (or bank payment) should debit those three accounts for the same amounts.
Once posted, those liabilities should return to zero — confirming your remittance matched the deductions.

5. Employer Expenses

Don’t forget your side of CPP and EI.
Those amounts are not deducted from employees — they’re additional business expenses.
Ensure they’re recorded in your payroll expense accounts (often “Employer CPP Expense” and “Employer EI Expense”).

At year-end, these flow into your business deductions, reducing taxable income.

6. Reconciling Payroll Monthly

At the end of each month, confirm that:

• The total CRA payable accounts match your submitted remittances.
• All payroll expenses are recorded in the same period they were paid.
• Net pay amounts have cleared the bank.

If any payable account shows a lingering balance, it means something wasn’t recorded or applied properly — fix it before the next month’s remittance.

Final Thought

Payroll bookkeeping isn’t about memorizing accounts — it’s about creating a repeatable system that balances every time.
Once set up properly in QuickBooks Online, your payroll should flow automatically from Wagepoint to CRA with zero manual guessing.

‍