How To Set Up A Payroll System For Your Business

Posted 2 years ago in Other.

Earnings are divided into two fundamental concepts: salary perceptions and non-salary perceptions.

How To Set Up A Payroll System For Your Business

What is payroll?

We will start with the most basic, the definition of payroll. The payroll is the document the company delivers to the employee in which the salary is reflected. But not only the employee must know the term payroll, but the self-employed and companies must also know what it means and what concepts they should apply in their jobs. Therefore, payroll is an irreplaceable resource between workers and employers. Keep reading; you will know How to Set Up a Payroll System for Your Business.

What should the payroll contain? 

When creating a payroll, a series of essential aspects that will shape the final payroll must be considered. 

Let's see some of them: 

Concepts to keep in mind

Type of contract: Not all contracts are the same and have the same kind of payroll. The duration of the contract marks the evolution of the type of payroll.

Collective agreement: Depending on the collective agreement, one or another salary supplement, overtime, etc. will be applied.

You pay extra: Knowing if the payments will be prorated in the monthly payroll or application within the stipulated periods is essential.

Professional category: The professional category is linked to the contribution group directly affecting the Social Security contribution.

Vacation: Leaves are also a determining factor for the final calculation of payroll.

But this is only the beginning; creating a list requires considering a series of steps and provisions of the parts it is composed.

Parts of the payroll

Payroll header 

As an excellent legal document, they have a header part that must be included in all payrolls and includes the following data: 

1. Company data.
2. Worker data.
3. Settlement period.

A simple glance at the header should serve to know who and to whom the invoice is issued without any doubt.


Earnings are remunerations the worker receives for their work or professional activity. In other words, the accruals are all the employee's salary concepts during the month worked. Added together, they make up the employee's gross salary without deductions. This must be very clear. Earnings are divided into two fundamental concepts: salary perceptions and non-salary perceptions. 

Salary perceptions 

They are all the perceptions the employee receives for his work: money, bonuses, or in kind. They all contribute to Social Security. What are they? 

1. Base salary.
2. Salary supplements (seniority, bonuses, dangerousness, extras for objectives).
3. Extraordinary hours.
4. Flexible remuneration.

Non-Salary Perceptions 

Concepts and perceptions related to compensation, suspension, or dismissal. They do not contribute to Social Security. All these concepts make up the accruals, and the sum of all of them is called the Gross Salary, which will be well reflected in the payroll.


This is the third part of the payroll. In it, we will find the deductions, those concepts that are subtracted from the accruals and result in the net salary.

The basis for income tax withholding 

The total accrued is taken, and the amounts exempt from income tax are subtracted.


In the last part of the payroll, the Liquid to be received is reflected. The accruals and the deductions associated with them will be detailed. Thus, in general, we identify Total Remuneration. Depending on the case, this amount will be the worker's monthly salary with or without prorated payments. Also, if there are prorated extra payments, they will be visible in this part of the payroll. 

Below, we can already find a small summary referring to the contribution base to the SS, the professional contingencies Base, the Personal Income Tax Base, the Total Accrued, and the Total to be deducted. 

Finally, and as the final part of the payroll, the following data must be specified: 

1. Payroll entry date.
2. Bank entity and account number.
3. Company stamp or employer signature.
4. Employee's signature as confirmation.

Luckily, numerous applications and platforms facilitate payroll creation, making obtaining the data and calculations related to amounts much easier, becoming an automatic process in most cases.


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