Gusto payroll journal entry: a worked example with taxes and benefits

Book each Gusto pay run as one entry on its check date. Debit wages for gross pay, payroll taxes for the employer's share, and benefits for what the company pays. Credit the bank for Gusto's two debits, net pay and taxes, and credit a payable for anything paid later, such as a 401(k) deferral. A $20,000 run in the example below costs the company $22,850 and takes $20,650 from the bank.

Updated September 30, 2026 · 4 min read · By the Accountable team

One Gusto pay run, as one journal entry

Sep 30, 2026Gusto payroll, 2 employees

Account	Debit	Credit
Salaries and wages	$20,000.00
Payroll taxes	$1,650.00
Employee benefits	$1,200.00
Bank: Gusto net pay debit		$13,970.00
Bank: Gusto tax debit		$6,680.00
401(k) payable		$1,000.00
Benefits payable		$1,200.00
Balanced	$22,850.00	$22,850.00

The company's cost is $22,850; Gusto takes $20,650 from the bank in two debits.

The short version

Gusto takes separate debits from your bank for each payroll: one for net pay, one for all payroll taxes, and one for reimbursements if there are any.
Gross wages are the expense, not net pay: employee taxes and deductions are part of what the company owes.
The employer pays 6.2% Social Security on wages up to $184,500 in 2026 and 1.45% Medicare on all wages, plus federal and state unemployment tax on the first part of each person's pay.
A payroll clearing account lets the entry post on the check date and the bank debits clear it, so nothing is counted twice.
Gusto's Payroll Journal report, downloaded as CSV, has every figure the entry needs: check date, gross earnings, employer taxes and net pay.

A $20,000 pay run costs the company $22,850

Two employees, a September 30, 2026 check date, and one of them saving for retirement. Both have already passed the $7,000 federal unemployment wage base this year, so federal unemployment tax is $0; state unemployment is $120.

One Gusto pay run, gross to net, with the employer's costs
Line	Amount	Who pays it
Gross wages	$20,000.00	Company
Federal income tax withheld	$2,600.00	Employee, from gross
State income tax withheld	$900.00	Employee, from gross
Social Security withheld (6.2%)	$1,240.00	Employee, from gross
Medicare withheld (1.45%)	$290.00	Employee, from gross
401(k) deferral	$1,000.00	Employee, from gross
Net pay (direct deposits)	$13,970.00	What employees receive
Employer Social Security (6.2%)	$1,240.00	Company
Employer Medicare (1.45%)	$290.00	Company
State unemployment tax	$120.00	Company
Employer health insurance	$1,200.00	Company, billed by the insurer

The journal entry: expenses on one side, the bank and payables on the other

Pay run of September 30, 2026

Debit Salaries and wages $20,000.00

Debit Payroll taxes $1,650.00 (Social Security $1,240, Medicare $290, state unemployment $120)

Debit Employee benefits $1,200.00

Credit Bank $13,970.00 (Gusto's net pay debit)

Credit Bank $6,680.00 (Gusto's tax debit: $5,030 withheld plus $1,650 employer taxes)

Credit 401(k) payable $1,000.00 (sent to the plan provider)

Credit Benefits payable $1,200.00 (paid with the insurer's bill)

Total debits $22,850.00 = total credits $22,850.00

When the 401(k) contribution and the insurance bill are paid, debit each payable and credit the bank. The company's cost of this run is $22,850; the bank sees $20,650 on the day Gusto debits it.

Use a payroll clearing account when the debits and the check date fall on different days

Gusto debits your bank a few days before payday, depending on your direct deposit speed. If you book the entry on the check date and the bank shows the money leaving earlier, a clearing account keeps both right.

Step 1: On the check date, post the expenses and credit Payroll clearing $20,650 (net pay plus taxes), 401(k) payable $1,000 and Benefits payable $1,200.
Step 2: When Gusto's net pay debit hits the bank, categorize it to Payroll clearing: debit Payroll clearing $13,970, credit Bank.
Step 3: When the tax debit hits, do the same for $6,680. Payroll clearing is back at $0.
Step 4: At month-end, Payroll clearing should be $0. A balance means a debit is missing or was categorized as an expense twice.

How the clearing account empties

Check date: post the pay runExpenses $22,850; Payroll clearing credited $20,650
Net pay debit clears $13,970Categorized to Payroll clearing
Tax debit clears $6,680Payroll clearing is back at $0

Get the numbers from Gusto's Payroll Journal report

Step 1: In Gusto, go to Reports and open the Payroll Journal report.
Step 2: Keep check date, gross earnings, employer taxes and net pay in the report.
Step 3: Pick the date range by check date and download it as CSV.
Step 4: Add up each pay run's gross earnings, employer taxes, net pay and deductions, and post one entry per run.

In Accountable, you upload that CSV on the Gusto row in Connections, and each pay run posts one entry against Payroll clearing; runs already booked are skipped. See Add Gusto payroll.

Questions founders ask

Do I record gross pay or net pay as the expense?

Gross pay. Net pay is only the part that reaches employees; the taxes and deductions withheld from gross are still wages the company owes.

Are employee payroll taxes an expense for the company?

No. Taxes withheld from employees are part of gross wages. Only the employer's share, such as its 6.2% Social Security and 1.45% Medicare, is a payroll tax expense.

Why does Gusto take two amounts from my bank?

Gusto debits net pay and payroll taxes separately, plus a third debit for reimbursements when there are any. Each should clear against the same payroll entry.

When should I book payroll, the pay date or the pay period?

Most startups book on the check date. If a pay period crosses month-end and the amount matters, accrue the days worked but unpaid at month-end and reverse the accrual next month.

Upload Gusto's report, and every pay run posts itself

Upload the Payroll Journal CSV in Connections after each payroll. Each pay run posts wages, employer taxes and benefits against Payroll clearing, the bank debits clear it, and runs already booked are skipped.

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Sources, checked September 30, 2026: