How To Calculate A Payroll: Keys To Interpret It
It is an essential document in your work life and even if you are tired of seeing it every month, it is likely that you have doubts about the meaning of each of the data that appears in it. Therefore, in this article we want to explain how to interpret a payroll and how to calculate it so that if there is an error in it, you can detect it.
What is a payroll?
The payroll of every worker is that document that specifies the remuneration that an employee receives each month for the work he or she performs within the company.
This document must reflect the contributions and withholdings, essential information for both the employee and the company . For example, two of these key aspects are the amount of the payroll that is destined for Social Security and the withholdings of the Personal Income Tax, the IRPF.
Therefore, you should know what the net salary is and what are the different contributions that your payroll reflects. The company also needs to make a correct calculation of your payroll because it is convenient for it to have in order the documents that are part of the internal accounting and that allow it to make an adequate calculation of personal income tax and other withholdings.
What items are on a payroll?
Your payroll should include the following items:
- Header . In the case of the company, the data has to do with the CIF, the address and the social security contribution account. In the case of your data, it is essential that your professional category and contribution group appear , essential to know what your salary perceptions are.
- Accruals . It appears in the central part of the document and is made up of the different salary and non-salary perceptions. With this information the gross salary is obtained .
- Deductions . These are the discounts that are made to the gross salary, so when applying them, the net salary is obtained.
- Contribution base . It is the total gross salary and is an important indicator for calculating benefits such as retirement or unemployment benefit.
What are the key elements to calculate a payroll?
As we have already pointed out, accruals are made up of two types of earnings:
- The salary perceptions are those you receive for the normal development of your work functions. Also listed here are overtime, overtime pay or any payment that is not cash, for example receiving the company’s services at zero cost.
- Non-salary perceptions have to do with social security benefits or compensation —for dismissal, transfer or other reason—. At the end of this area of the payroll, adding everything, the total accrued is detailed.
What does the salary deduct?
- The worker’s contributions to social security and concepts of joint collection – common contingencies, unemployment or temporary disability, professional training. This deduction has a maximum percentage of 6.7% of the contribution base.
- IRPF . Although this tax is settled annually, every month, little by little, this obligation is paid to the State with a part of our contribution base.
- Advances . If a salary advance is requested, it will be deducted from the total salary in the next payroll.
- Other accruals . For example, the quota to the company’s union, if you exercise your right to strike, unjustified absences or a sanction of employment and salary by the company. All these concepts are deducted from your salary.
How to determine the bases for calculating the payroll?
To determine the contribution base, other essential aspects must be taken into account:
- Contribution base for common contingencies (BCCC) . It is obtained by adding the base salary and the salary supplements that are subject to contribution and also the pro rata of the extraordinary payments. Overtime does not enter into this calculation.
- Quote for overtime . Or what is the same, the payment that is derived for normal overtime.
- Contribution base for contingencies . It is calculated by adding to the contribution base for common contingencies the value of overtime hours – in the case of carrying them out. It is the same base that is used for unemployment, vocational training and the wage guarantee fund.
- Base subject to personal income tax withholding . It is obtained by adding the total accrued value and subtracting the amounts exempt from personal income tax, such as allowances or compensation.
After reading the article, you are sure you are clear about the sections of your payroll, what they mean and how to calculate your payroll. It is not something excessively complex, but there may be something that has remained in your inkwell and when you try to calculate it, the result does not match what you see in the document. If so, check with your company to see if there are any errors or contact an expert who can review it and clarify if everything is in order. Do not leave with doubt!