What is a payroll?
A payroll sheet is a document that contains information about salaries and compensation , charges, and benefits granted to a company’s employees. It must be prepared monthly and serves as a record of all information regarding the remuneration paid to workers.
Also known as a payslip, this document records the base salary, paid weekly rest, income taxes, overtime, night shift allowance, commissions, bonuses, social security contributions, and other information.
This is one of the most efficient ways for companies to manage costs related to payroll and employee compensation. After all, the amounts must be included in the description for the company to comply with the law.
Now that you know what a payroll is, it’s time to learn more about the process of creating one. So, check out the next topic!
How is payroll processed?
To prepare payroll, it’s essential to organize the information systematically. After all, each piece of data must be in its correct cost center .
However, these classifications should be made carefully. After all, each point takes into account various variables, such as: the profession, individual agreements, and company peculiarities.
Given this wide range of options, it’s common for companies to even hire a digital accounting consultancy to help in the initial stages.
But, regardless of the strategy used, the payroll must be based on the numerical values identified and generated through categorized codes, references, and percentages.
Therefore, the organization must take into account parameters such as:
- Employee classification: identify the professional category the worker falls into. This point is fundamental, after all, there are professions regulated by collective agreements. Therefore, they are subject to the specific basic rules of these agreements for calculating payroll values.
- Accounting for hours worked: when preparing the payroll, it is necessary to include all hours worked on a regular basis, overtime, and even paid rest periods. At this stage, unjustified absences and lateness must also be taken into account.
- Social security and income tax deductions: another point to consider when preparing payroll is social security contributions and taxes. For example: deductions for the National Institute of Social Security (INSS), the Guarantee Fund for Length of Service (FGTS) deduction, and income tax withholding.
- Deduction of legal benefits: Finally, it is also necessary to deduct the benefits granted to employees. This will also make it possible to calculate important indicators, such as contribution margin and profitability .
Besides understanding how the spreadsheet is structured, another essential point for success in this process is knowing how to organize the data to create the document. Therefore, check out more details below!
How is the payroll closed?
Payroll closing is a process that involves a series of steps that must be carried out according to the deadlines established by labor law.
In general, closing data must be submitted to eSocial by the 15th of the month following the payroll closing month.
Furthermore, currently in USA, payroll must close by the last day of the current month. However, payroll must be paid by the 5th business day of the month, regardless of the payment method chosen by the company.
To meet these deadlines, the company needs to be organized. Therefore, we have separated the main steps for closing the payroll. They are:
- Information gathering: it is necessary to gather all information regarding salaries, overtime, benefits, deductions, and other items that make up the payroll;
- Calculation of amounts: Based on the information collected, it is necessary to calculate the amounts owed to each employee. It is important to remember that this step must correctly follow the rules established by labor legislation and collective bargaining agreements, such as those of the unions;
- Payroll processing: With the calculated amounts in hand, it’s possible to issue each employee’s payslip. This requires detailing information such as the name, gross salary, deductions, and net salary.
- Payment of amounts: once the payroll is issued, the company must make the payment of the amounts owed to the employees;
- Sending information to the relevant authorities: Finally, the company must send the payroll information to the relevant authorities, such as the Federal Revenue Service, the Ministry of Labor, and Social Security.
These are the standard steps for closing the payroll. However, it’s important to remember that there are differences depending on unions and even the legislation applied to each work model.
Therefore, it is very important that the company is always up-to-date on the rules applicable to payroll processing.
What are the main benefits of payroll?
Payroll calculations include amounts related to earnings, meaning an increase in compensation corresponding to benefits and employment obligations.
There are various types of benefits, which can be legally established or agreed upon between the employee and the employer.
To help you better understand these possibilities, we’ve outlined the main benefits that may appear on your payslip. They are:
Base Salary
Base salary is the agreed-upon amount between the employer and the employee as compensation for the work performed.
Overtime
Whenever hours are worked beyond the normal working hours agreed upon in the employment contract, overtime hours are included in the payslip. These must be compensated with an increase in relation to the value of the normal hour of work.
Night Shift Allowance
Labor law also provides for a benefit called night shift differential. This is the amount paid for work performed during the night shift, between 10 PM and 5 AM.
It is worth noting that the benefit should also be paid with an increase in relation to the value of the normal hour of work.
Committees
Commissions are payments made as a percentage of sales made by employees, as a way to incentivize performance and increase productivity.
This is one example of income derived from agreements between parties, and is not legally required.
Bonuses
Bonuses are payments made in recognition of performance or achievement of goals, and can be granted individually or as a group.
Meal vouchers and food vouchers
Meal vouchers and food vouchers are benefits provided by companies to help with food expenses during working hours.
There is no legal obligation to provide this benefit; however, it is very common for medium and large-sized companies to make this payment.
Transportation voucher
Similar to the previous benefits, there is also an option to cover the employee’s commuting expenses between their residence and workplace.
Transportation vouchers are typically calculated based on the rates in effect in the region and the number of days worked in the month.
Health Plan
Health insurance is also one of the possible benefits included in the payroll. This is a benefit that offers medical and/or dental assistance to employees and their dependents.
Although these are the most common benefits on the payroll, it is important to note that they may vary depending on the company and applicable legislation.