As an employer, you have certain obligations and must prepare a payslip for your employees. You have to give this to every employee. Even if most of your employees only take a brief and cursory look at it, everyone should be aware of the importance of a payslip because it serves, for example, as proof of income and taxes for the tax office. But that also means a lot of obligation for you as an employer, because you have to make sure that a payslip is always issued correctly.
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What is a payslip?
But what exactly is meant by the term payroll? As already mentioned at the beginning, the payslip is an essential document for every employee. The payslip is an exact list of the wages and provides information about which items it is made up of. The following data can be taken from the payroll:
- What is the gross wage?
- How much is the wage tax paid?
- What social security contributions were paid, and how much?
- What is the net salary?
Strictly speaking, the payslip is a document that provides information about the number of wages that an employee is entitled to. In addition, the payroll shows how many and which services have been made to the tax office and the social security agencies. For this reason, the recipient of a payslip should always file it and not throw it away. As a rule, the following items are deducted from an employee’s wages:
- Income tax
- Church tax
- Health insurance contributions
- Unemployment insurance contributions
- Pension insurance contributions
- Long-term care insurance contributions
- Solidarity surcharge
Difference to payroll
Some people lump payroll and payroll together and use these two terms as synonyms. But this is not correct, because wages and salaries are not the same. A salary is understood to be a sum that has been firmly agreed with an employee, not dependent on the hours worked. When it comes to wages, the hours worked can vary from month to month, and therefore the number of wages can also vary.
Different from payroll, a paystubs known as a pay slip, provides a summary of how much the employee has earned and how their earnings were taxed during a particular pay period. There can be allowances or deductions beside gross wages. They may also show expenses to help calculate net pay and take-home pay.
Definition of income tax
The term wage tax is a unique form of a collection of income tax. So it is not a different type of tax. Income tax must be paid by all employees who receive income from non-self-employed work . The wage tax is always calculated depending on the amount of the wages and the personal circumstances of the employee. The tax office deducts the wage tax directly from the employee’s salary.
How do you have to prepare a payslip?
Depending on which tool you use to create a payslip, its design or specific data arrangement can be so different. However, that does not mean that the same central data deviate from one another and are different. They all agree.
Step 1: General information
In the general information, you have to list the following points in the upper third of the payslip or the payslip:
- Employee data: This is personal information from your employee, such as your date of birth. In addition, there are tax characteristics, e.g. income tax class and information relating to his social security.
- Overview of working hours and vacation time: These points include information such as the date you joined your company, the times when he was present or absent, and possibly an overview of the vacation days he still had.
- Contact details: This concerns the private address of your employee, his name and any personnel number or department number.
- Notes on billing: The billing information can also be found in the upper third. These include, for example, the employee’s weekly working hours, their hourly wages and, if available, their cost centre.
Step 2: Fill in contributions.
The next step is to fill the payroll with numbers. This means that you have to add values to both the wages and the corresponding deductions.
- Gross payments: For monthly payments, which consist, for example, of hourly wages, wages from public holidays, vacation wages or vacation pay, you must add a note on tax liability and social security obligation to each item.
- Deductions: In addition to income tax, deductions also include church tax and the solidarity surcharge.
- Net withdrawals and net deductions: Next, you have to find the sum of all deductions.
- Payment amount: The most important value, at least for the employee, is the amount he receives for his working hours.
Step 3: Further information
Now let’s go down in the payroll. For most accounts, the additional information can be found here. These include the following notes:
- Total cost to the employer. This information is optional.
- Bank details and account details of the employee.
- As a footer, the note that the payslip was drawn up as stipulated in Section 108 (3) of the Trade Regulations.
- Information on the company pension scheme, if this exists.
Mandatory information on the payroll
All of the above information is not mandatory for you, and you do not have to include all of them on your payroll. However, according to Section 108 Paragraph 3 Clause 1 of the Trade Regulations, there is the certain minimum information that you must provide to your employee. Therefore, among other things, some general information is included here.
- Name and exact address of employer and employee
- Insurance number and date of birth of the employee
- Start of employment of the employee with the date and, if necessary, the end of the employment relationship with the exact date
- Exact billing period with the tax days and social security days included
In addition to the information just mentioned, other things must be stated. These are:
- Type of surcharges, allowances or other allowances and their exact amount.
- Composition of wages. This remuneration must include the income tax class, child allowances, deduction of church tax, etc.
- Precise information on deductions, advances or reductions and their exact amount.
- Collection point, total social security contribution and contribution group key.