If you are receiving or issuing monthly payrolls, you know how complicated it can be to read and understand all the details and numbers that appear on this paper. However, you don’t have to worry. With this guide, you can have a clear idea of how your remuneration works.
Before we begin, it is important to define what a payroll is. In summary, it is a document that details the salary and other benefits that a company pays to its employees for the work done during a certain period.
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The payroll header
A payroll is composed of several sections, which may vary depending on the company and the country.
The first section, the header, generally includes basic information about the employee, such as their name, identification number, job position, and department.
The next section after the header usually details the gross salary of the employee, which is the salary before deductions are applied.
Understand the deductions on your payroll
The payroll shows the income and deductions that an employee receives for their work. Therefore, it is important to know some basic concepts about payroll deductions.
First, it is important to know that there are mandatory and voluntary deductions. Mandatory deductions are those that the employer is legally required to withhold, such as income taxes, contributions to social security, and unemployment insurance. Voluntary deductions, on the other hand, are those that the employee chooses, such as contributions to the retirement plan or health insurance.
It is important to understand that deductions may vary depending on the employee's salary, marital status, number of dependents, and other factors.
If you receive non-monetary benefits such as restaurant tickets, daycare vouchers, etc., they will be reflected in this section.
Totals and net pay
Finally, the payroll includes a summary of the payments made to the employee during the payment period:
In general, it is important that the payroll is clear and detailed, so that your employees can easily understand the payments they are receiving and the deductions that are being applied to them. In addition, these documents must be filed by the company to comply with tax and labor obligations..