How to calculate payroll

calculate payroll It is one of the essential tasks of the Human Resources department. A function that will have to be done directly by small entrepreneurs who do not get enough for so much deployment.

Although the majority usually contract the services of an agency or use online programs for these tasks, knowing how to calculate an employee’s payroll and understand concepts such as the regulatory base, the APR, how much personal income tax is paid, how much is the net salary and the gross salary It’s fundamental for both employers and workers.

A payslip is an official document in which it is reflected how much money a worker receives as compensation for his services to the company in which he is hired. The payroll is therefore a full receipt. A salary payment receipt, which also justifies the payment that the worker makes each month of Income tax and Social Security.

Doing a payroll calculation may seem complicated because it contains so many concepts, but once you understand each of them separately, the process becomes easy. In other words, to know how to make a payroll you just have to understand how its different elements are calculated (such as overtime or the base salary, for example) and know the taxes that record them.

Key elements of a payroll

1. Company and worker data

In general, the company data is placed on the left and the worker’s data on the right.

The data that must be reflected in the business are the following:

Company name

Home

CIF

Quote account code

The data that must appear on the worker are:

Name

NIF

Social Security Number

professional group. (Before the 2012 reform this concept was called category).

Quote group. (This point is very important because it determines the limits of the contribution bases, something important to calculate the payroll).

2. Payroll accruals

This section collects what the company owes the worker and is divided into two types: salary perceptions and non-salary perceptions. The former include the base salary, salary supplements, overtime, complementary hours, extraordinary bonuses and salary in kind.

salary perceptions

1. The base salary is the remuneration set per unit of time or work worked or carried out by an employee, according to the Workers’ Statute. There are two ways to set its value, through a collective agreement or through an individual agreement, always complying with the workers’ statute.

2. Salary supplements are a series of variables that result in an increase in the base salary. These variables can be reflected, according to bizneo.com, as:

· Plus seniority.

· Complement of languages, title or special knowledge.

· Supplement for productivity.

· Night bonus.

· Plus of toxicity, danger or similar.

· Complement for working holidays.

· Plus for function performed.

· Supplement for time availability.

· Gratuity for benefits.

· Access to company shares.

Non-wage earnings

On the other hand, non-wage payments refer to bonuses (transportation, distance, travel allowances, etc.), which are not strictly considered wages. They do not contribute to Social Security.

3. Payroll deductions

The deductions are the contributions and taxes for the taxes paid by the worker, personal income tax deductions and Social Security contributions. In most payrolls, the company makes the corresponding withholdings on the employee’s salary. This withholding is nothing more than an advance payment that the employee will have to make to the Tax Agency as part of the personal income tax (IRPF).

When the time comes to do the statement of income (IRPF), the worker will have to pay the remaining part of the tax, or receive the corresponding refund, in the event that the company has withheld more than what he should pay. It is important to note that theThe withholding is applied according to the income tax bracket that the employee must pay according to his salary.

This is the last part of the payroll and it contains everything that is deducted from the base salaryand to get the net salary of an employee. In this way, while earnings reflect gross salary of a worker, deductions they are everything that the company withholds from the employee’s salary.

Regarding personal income tax, in 2021 the withholding table It was updated and included a new section that affects the highest remuneration, those of more than 300,000 euros, which are now withheld at 47%. The Tax Agency publishes a summary of the withholding tables in 2022 that can be consulted here.