basic guide to creating your company’s payroll

Payslips are accounting documents that show in summary the money paid to a worker during a certain period of time, which is usually one month in Spain.

The employee’s income is broken down there, i.e. their base salary, overtime pay, commissions, etc. Then, the deductions that apply depending on the case are shown, including taxes and Social Security contributions.

This document has several purposes, as it is necessary for companies to comply with tax regulations, while employees are provided with a detailed report of their income and it acts as proof of payment.

What are the basic elements of a payroll?

Understanding what a payroll is and how to prepare a payroll is essential for your company to comply with tax laws and avoid irregularities.

First of all, the parties involved need to be identified. In the case of the company, the company name, tax address, Contribution Account Code and CIF must be included. For employees, their full name, ID and Social Security number, among other data, must be included.

In addition to identification, payrolls must include the following:

• The time period to which the payroll corresponds.
• Employee’s start date to show seniority in the company.
• Professional category or group to which the worker belongs.
• The employee’s base salary, that is, the fixed amount of money that he or she will receive.
• Any applicable salary supplements, such as extra pay, commissions, allowances, etc.
• It is necessary to mention whether there is additional income such as compensation or aid from an organization, among others.
• Then, the IRPF withholdings, contributions to Social Security, and any other deductions such as seizures, loans and insurance will be specified.
• An important piece of information is the contribution bases, that is, the amounts on which Social Security contributions are calculated and which depend on the type of activity carried out by the employee and their contribution group.
• Finally, the result of the calculation is shown, that is, the net salary singapore email list  that the worker will receive after all deductions.

Components of a payroll

Let’s now analyze some of the most important concepts that you should  understanding kpis in email marketing know before learning how to calculate whatsapp number payroll.

This is the total amount of money that the worker will receive as a reward for the work he or she performed in a given period of time. In other words, it is the sum of all the remuneration concepts that make up the worker’s salary, including the base salary, salary supplements and overtime, among others.

As the name suggests, this is a sum of money that is deducted or subtracted from the worker’s gross salary. In this sense, the most common deductions in a payroll in Spain correspond to Social Security contributions (for common contingencies, unemployment, vocational training, etc.), as well as IRPF withholding, payments in kind, advance payments and seizures, among other cases.

Net salary is the result of subtracting your gross salary from all deductions that apply according to your personal situation. This result will be the cash you will receive once the month ends.

It is important to keep in mind other concepts that can increase your base salary indicated on your payroll, such as:

• Extraordinary payments : correspond to Christmas bonuses, vacations, etc.
• Overtime : extra pay for work performed after the regular work day.
• Seniority, night work or danger bonuses : these are additional bonuses that increase the salary depending on the worker’s years of service, if they work night shifts or if their activities pose a risk to health.
• Commissions : This includes payments for meeting specific sales or production goals.
• Per diem and travel expenses : These are special payments to cover travel expenses for work-related reasons.

How to calculate a payroll step by step

Understanding how to calculate a payroll is easier than you think, but it requires a level of detail to ensure that the results are correct. For this reason, the first step will always be to gather information about the employee, since some deductions and Social Security contributions vary depending on their personal situation.

The process begins by calculating the gross salary of the worker. Here you only have to add the base salary that the person has according to the economic activity that he/she performs in the company. To this, the salary supplements that we explained in the previous section are added.

        Gross salary = Base salary + Salary supplements

Once you have the gross salary, it is time to subtract the deductions for personal income tax withholdings, the Social Security contribution (according to the corresponding contribution group) and any other deductions that apply. This subtraction will result in the net salary.

        Net salary = Gross salary – Deductions

Finally, it is important to verify all the data, so that the correct deductions are being applied. After this, you can generate the document that will be delivered to the worker.

Payroll tools and software

As we mentioned, creating a payroll requires attention to detail to avoid errors. This is precisely why different programs have been created to help you automate the process as much as possible.

These tools provide you with a means to ensure accurate calculations and save you time in your administrative management. Not to mention the fact that the software is constantly updated to generate payrolls that comply with current legislation.