Payroll journal entries record payroll-related financial transactions, including wages, taxes and deductions, within the general ledger. These entries reflect payroll data imported from a payroll provider or manually entered to align labor expenses with financial reporting. Payroll journal entries are used to reconcile labor accruals from POS data for each day of the pay period.
There are three unique fields on a payroll journal entry transaction that set it apart from a normal journal entry transaction:
Payroll Start Date - Records the start date for the pay period.
Payroll End Date - Records the end date for the pay period.
The Payroll Estimate Clearing tab - Displays the reversing entry of all the labor accrual entries.
Labor accrual entries are created using two sources:
Hourly Wages - Imported through the POS integration and created by matching job titles and labor punches. Hourly wages appear in the Labor section of the Daily Sales Summary (DSS).
Salaried Wages - Set using the Daily Manager Salary field on the Labor Estimate tab of the Location record.
Labor totals are not calculated for employees in polled data who have both of the following settings enabled on their R365 employee record:
- Exclude Labor Hours
Exclude Labor $
This exclusion applies to labor rules, daily sales summary, and labor reporting. These employees’ punch details will display $0 and 0 hours.
Beta
The payroll journal entry record has been updated and is currently in beta. All users can access the new experience.
Learn about the new journal entry features and how to switch to the new journal entry.
See documentation for the classic payroll journal entry record.
Prerequisites
Ensure that all related daily sales summaries are approved before creating a payroll journal entry. If all of the Labor information is not approved, the payroll journal entry will not clear out the accrued payroll account properly. Learn more about approving a payroll journal entry.
Security
The following permissions are associated with payroll journal entries:
General Ledger → Payroll Journal Entries → View Payroll JEs
General Ledger → Payroll Journal Entries → Edit Payroll JEs
General Ledger → Payroll Journal Entries → Create Payroll JEs
General Ledger → Payroll Journal Entries → Approve Payroll JEs
General Ledger → Payroll Journal Entries → Unapprove Payroll JEs
General Ledger → Payroll Journal Entries → Approve Payroll JEs
These permissions can be added to custom user roles or individual users. The Permission Access report can be used to determine which user roles or users already have these permissions assigned. For more information, see User Setup and Security.
The Accrued Payroll Account drop-down on the Labor Estimates tab of the Location record specifies the GL account used to record payroll liability in Restaurant365. This account is credited daily as labor costs are imported from the POS and posted through the Daily Sales Summary. Each daily entry represents an estimated labor accrual, building the payroll liability over the course of the pay period.
These daily accruals are reversed when the payroll journal entry is posted. On the date of the payroll journal entry, the system trues up the estimated labor by debiting the Accrued Payroll Account and replacing the estimates with actual payroll amounts. This process clears the accrual balance, so the GL account should return to zero if all accruals and payroll entries are properly aligned.
Payroll liability activity—including daily accruals and the corresponding reversal entries—can be reviewed in the GL Account Detail report.
Labor data in Restaurant365 is derived from two sources: Daily Sales Summary (DSS) journal entries and payroll journal entries. DSS labor journal entries provide estimated labor costs based on POS imports, while payroll journal entries reflect actual payroll expenses processed through a third-party payroll provider.
When a DSS is approved, R365 automatically creates three types of journal entries—Sales, Statistical, and Labor. The labor journal entry is an estimate generated from hours worked and pay rates mapped to job titles in R365. This estimated labor data powers labor reporting throughout Smart Ops and supports visibility into labor costs on profit and loss statements. However, this estimate is not final and will be replaced with actual data once payroll is processed.
Payroll journal entries are created using the Payroll Journal Entry record—not the standard Journal Entry form—and must include the pay period start and end dates. These entries clear the DSS labor accruals for the matching period and provide actual payroll data at the account level. Upon approval, R365 matches the payroll journal to the relevant DSS labor entries, clears the estimated amounts, and records the net differences. This ensures that only actual payroll costs remain in the system. Variances between estimated and actual labor are shown on the Distribution tab, while cleared DSS labor is tracked on the Payroll Estimate Clearing tab.