Before You Start

This guide assumes you have a Gusto account with payroll history and admin access to QuickBooks Online or Xero.

Overview

30 min
Setup Time
Advanced
Difficulty
Monthly
Maintenance

What You’ll Learn

  • How to structure your Chart of Accounts for payroll
  • Mapping Gusto payroll components (wages, taxes, benefits)
  • Automating payroll journal entries
  • Reconciling payroll liability accounts

1. Preparation Steps

Before connecting Gusto, ensure you have these accounts in your accounting software (QuickBooks/Xero):

Required Accounts

  • Gross Wages (Expense)
  • Employer Payroll Taxes (Expense)
  • Payroll Tax Liabilities (Liability)
  • Benefits Expense (Expense)

Optional (but recommended)

  • Net Payroll Payable (Liability)
  • 401k Contributions Payable (Liability)
  • Health Insurance Payable (Liability)

2. Choosing Your GL Sync Method

You have two main options for recording Gusto payroll in your General Ledger.

Method A: Manual Journal Entries

This involves manually creating a journal entry in your accounting software after each payroll run.

Pros:
  • Complete control over entries.
  • No subscription fees for integration.
  • Good for complex or unique mappings.
Cons:
  • Time-consuming and prone to errors.
  • Requires manual data entry each pay period.
  • Difficult to scale for growing teams.

Method B: Direct Integrations (Gusto built-in)

Gusto offers direct integrations with QuickBooks Online and Xero to automate your payroll journal entries.

Expert Tip: We strongly recommend using Gusto’s built-in direct integration. It automatically generates journal entries, ensuring accurate and timely recording of all payroll components, and drastically simplifies reconciliation.

3. Step-by-Step: Gusto GL Mapping

Here is the high-level workflow for a clean setup.

Here is a sample code block to show how payroll data might be structured for an automated journal entry.

{
  "payroll_run_id": "PR-2025-01-15",
  "pay_date": "2025-01-15",
  "total_gross_pay": 5000.00,
  "employer_taxes": 382.50,
  "employee_taxes": 765.00,
  "net_pay": 3852.50,
  "benefits_deductions": 100.00
}

4. Setting Up Gusto Integration

  1. 1

    Connect Gusto to your Accounting Software

    From your Gusto account, navigate to “App directory” or “Integrations” and select QuickBooks Online or Xero to connect. Authorize the connection.

  2. 2

    Initial Account Mapping

    Gusto will present a default mapping of payroll items to your Chart of Accounts. Review this carefully and adjust any accounts that don’t match your intended GL structure.

  3. 3

    Map Payroll Items (Wages, Taxes, Benefits)

    Ensure each component of payroll – gross wages, employer taxes, employee withholdings, and benefits – is assigned to the correct expense or liability account in your accounting software.

Common Error: Unmapped Payroll Items

Any unmapped items will either default to a generic account or cause sync errors. Ensure all wages, taxes, and deductions have a corresponding GL account to avoid reconciliation headaches.

5. Testing Your Setup

Test Mapping Checklist

  • Process a small test payroll (if available in Gusto)
  • Review the generated journal entry in QuickBooks/Xero
  • Verify all debit and credit amounts are correct
  • Confirm liability accounts are accurately updated

Need Help?

Get Payroll GL Support

Struggling with complex payroll mapping or reconciliation? Our team specializes in Gusto and General Ledger configurations.

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