Many people think that making a basic payroll is just clicking a button and it automatically calculates what each employee earns. I’m sorry to tell you no, having a simple, intuitive and complete payroll software in your company is essential to make a payroll correctly, but its preparation is somewhat more complex.
Today most companies manage their payroll with a program and manual calculations are not made. here you can learn how to make a payroll step by stepbut in order to apply that theory, you must know how to use payroll management software or your knowledge will remain stagnant.
Without going into technicalities, we are going to show you the key points to take into account in a payroll program and how it can help you save time in the preparation process.
What data is included in the payroll?
The first thing that we must inform in a payroll program is the fiscal data of a company and the agreement to which it has signed. Then, we will register each employee in the company, attaching their personal data and professional category.
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With this information, we can now begin to calculate each settlement period, which generally corresponds to the calendar month.
Secondly, we go on to detail the salary concepts. Basically, we distinguish two large categories of concepts:
- recurring: They are reported once in the program and automatically appear on the payroll each month.
- Variables: Those concepts that are different every month and that we must accurately report each time we have to pay them.
An optimal initial configuration of the concepts that will be included in the payroll will be essential. This will help to prepare it correctly the rest of the time and save time in later revisions.
Once we have included the monthly concepts, we calculate the payroll automatically with the software and look at the 3 large blocks of results:
- Accruals: The sum of salary payments.
- Deductions: The amounts that are subtracted from the retributions.
- Liquid to perceive: The money that will be deposited in the worker’s bank account and corresponds to the total accrued minus the total deductions.
What taxes do we pay on our payroll?
Social Security is paid, on the one hand, by the company directly. On the other hand, part of the worker’s gross salary is deducted.
The worker’s contribution is between 6.35% and 6.4% of the contribution base. This is included as payroll deductions.
The company’s contribution is 31.5% of the contribution base. It does not impact the employee’s salary, since it neither adds nor discounts, they are merely informative concepts of the cost that a worker supposes for the company.
The payroll program automatically calculates how much is the contribution base and the quota that we must pay, based on the salary concepts that we have informed each month. As well as, it will prepare the files to inform this data to the Social Security.
These functions are very useful for businessmen who do not want to do manual calculations or face-to-face tax filings in the offices, as was done in the past.
personal income tax
The Personal Income Tax is required to be paid by any worker.
The Treasury proposes some rules that tell us what we must pay according to the salary we receive in annual terms and our personal situation.
The company has the obligation to withhold part of the salary as personal income tax in order to deposit that money in the Treasury account month after month.
The estimate of what percentage of personal income tax to apply each month to each employee is automated in the payroll management software. Therefore, it is not necessary for us to know how to use the Treasury algorithm, although we do need to check that the proposed types are coherent.
We hope this summary has helped you understand the structure of a payroll, what points are essential to report and what results are important to check each month.