What exactly is payroll administration?
Payroll administration, also known as salary administration, is essentially the process of paying your employees and withholding the correct amount of payroll taxes. The tasks involved typically include:
- Determining the net amount to transfer to your employees.
- Calculating the payroll taxes to be remitted to the tax authorities.
- Ensuring timely distribution of payslips.
- Submitting payroll tax returns and making accurate payments on time.
But that's not all. You must also consider any applicable pension schemes and collective labor agreement (CLA) regulations.
Onboarding new employees
In addition to payroll administration, there are other administrative tasks to handle when onboarding new employees.These include verifying employee information, determining appropriate salaries, and drafting employment contracts. In larger organizations, an HR manager often oversees payroll processing and related administration.
Payroll administration typically follows these seven steps:
- Collecting and verifying employee data.
- Determining gross and net salaries.
- Calculating and withholding payroll taxes.
- Generating and distributing payslips.
- Submitting payroll tax returns.
- Paying net salaries to employees.
- Maintaining accurate records for compliance and reporting.
What does a payslip include?
A payslip can be a complex document due to various administrative elements. Typically, it contains:
- Employee personal details: name, address, date of birth.
- Employment contract highlights: agreed weekly working hours, employment start date, job title.
- Gross salary: the amount earned before deductions.
- Payroll tax: the amount withheld from the employee's salary for taxes.
- Other deductions: contributions to pension funds, training funds, or social funds.
- Post-tax reimbursements: additional payments for expenses like travel or declarations.
- Net salary: the final amount deposited into the employee's bank account.
- Remaining leave hours (optional).
Managing the paperwork
Correspondence from the Dutch Tax Authority
Handling payroll administration inevitably involves dealing with various forms and paperwork, such as:
- An overview of tax return periods received annually around November.
- Your company's sector classification upon registration with the Chamber of Commerce.
- Your company's payroll tax number after registering with the tax authorities.
Tip: Always store these letters securely or forward them to your accountant or bookkeeper.
Employee Documentation
When hiring a new employee, you're required to maintain certain records, including:
- A copy of their ID.
- An employment contract.
- A payroll tax declaration form.
Upon salary payment, ensure you provide:
- An accurate payslip.
- A payroll summary.
- An annual statement.
- Proper entries in your accounting records.
... and don't forget to pay on time! Delays in salary payments to employees or remitting payroll taxes to the tax authorities can lead to employee dissatisfaction and significant fines.
Important: payroll administration is about your employees
It may seem obvious, but employees are often the most vital part of any organization. They ensure your business operates smoothly and continues to grow. Moreover, employees often serve as the first point of contact for your customers.
Good payroll & HR software helps you get started
Can't see the forest for the trees? Fortunately, simple payroll software can help you get started. Many other business owners or HR managers choose to outsource payroll because of a lack of knowledge and time. This way, they have full focus on their own business, service and performance. Do you also have this experience?
You can get your payroll in order by partnering with an accountant, a payroll office, or by using an online payroll software solution such as Employes. This benefit will save you a lot of time and work.
Rob Kroezen
Founder
5+ years ago, Marius and Rob founded Employes together. With a mission to simplify payroll for business owners and HR managers.
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