General ledger

What Is a General Ledger?

A general ledger (GL) is a complete record of all financial transactions made by a business during a specific period. It acts as the central hub of an organisation’s accounting system, categorising every financial activity into accounts such as assets, liabilities, income, expenses, and equity.

In the context of payroll and workforce management, the general ledger is critical—it reflects wage expenses, superannuation payments, tax obligations, leave liabilities, and more. Each of these elements must be recorded accurately to ensure compliance, financial health, and efficient business operations.

How the General Ledger Works

The general ledger is built on a double-entry accounting system, meaning every transaction is recorded in at least two accounts: a debit in one and a credit in another. This ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced.

For example:

• When wages are paid, the wages expense account is debited.
• Simultaneously, the bank account or wages payable account is credited.

Each transaction is timestamped and often linked to a journal entry that explains the reason for the transaction. These entries can be generated manually or automatically by payroll or accounting software.

Why the General Ledger Matters for Payroll

Payroll is one of the most substantial and frequent expenses for many businesses. Accurately mapping payroll entries into the general ledger is vital for:

• Financial Reporting – Ensures wage expenses, leave accruals, and liabilities are reflected correctly in profit and loss statements and balance sheets.
• Compliance – Assists in meeting obligations with the ATO, super funds, and auditors.
• Cash Flow Management – Gives visibility into upcoming liabilities like PAYG withholding or superannuation payments.
• Audit Readiness – Provides a transparent and traceable log of all payroll-related financial movements.

With Microkeeper, general ledger data can be exported or integrated directly with accounting platforms, streamlining reconciliation.

Common Payroll-Related GL Accounts

Here are some of the typical general ledger accounts affected by payroll processes:

Explore Microkeeper’s Payroll Automation Tools

Automating General Ledger Entries

Manual data entry can increase the risk of errors. That’s why many modern payroll platforms, including Microkeeper, offer features like:

• GL account mapping: Allocate pay categories and liabilities to the correct accounts.
• Automated exports: Generate general ledger files ready to import into MYOB, Xero, QuickBooks, and more.
• Multi-department tracking: Assign wage costs by location, department, or cost centre.
• Real-time reports: View payroll costs and liabilities as they’re incurred.

These capabilities simplify accounting, reduce compliance risk, and free up time for strategic work.

Best Practices for Managing a General Ledger

• Keep it clean: Regularly reconcile payroll entries with your bank statements and source systems.
• Use consistent naming conventions: Make it easy to identify and group related transactions.
• Automate where possible: Integration between payroll and accounting systems reduces errors.
• Audit trails: Maintain detailed records of who created or modified each entry.
• Review monthly: Spot anomalies and catch problems early before they cascade into year-end headaches.

General Ledger FAQs

What’s the difference between a general ledger and a journal?

‍A journal is a preliminary record of a financial transaction. Once approved, it’s posted to the general ledger, which serves as the official financial record.

Does the general ledger show detailed payroll data?

‍No, it shows summarised entries (e.g., total wages, tax withheld). Detailed payslip information is stored separately in your payroll system.

Do I need an accountant to manage the general ledger?

‍For most businesses, having an accountant or bookkeeper to review GL entries is recommended, particularly to ensure compliance and accuracy in reporting.

Final Thoughts

The general ledger is the backbone of financial reporting and business compliance. Especially when it comes to payroll, maintaining accurate, well-organised GL entries is essential for business health. With an integrated solution like Microkeeper, you can streamline payroll-to-ledger workflows, reduce errors, and stay compliant—all without extra admin burden.

_{Disclaimer: This article is for general information only and does not constitute financial advice. Please consult your accountant or a registered tax agent for advice specific to your situation.}