What is a payroll?

Payrolls are a very important part of the financial accounting of your business.

What is a payroll?

The payroll is a receipt that the company certifies the payment of the different amounts of money that make up an employee’s salary.

In other words, the payroll is the document that certifies that the company has complied with the payment of remuneration to its employees.

This certificate must include the extra payments and the discounts that correspond according to the law.

The most generalised model of a payroll is made up of three main blocks: the heading, the payments and the deductions.


In the first block, the heading must contain the main information. In the case of the company, it is the name or company name, the address and the Social Security number.

Similarly, the worker’s name and surname, social security number and, above all, three key pieces of information are requested:

  • The professional category: type of work that he/she performs according to his/her training.
  • Job position: indicates the task that the person carries out in the company.
  • Length of service in the organization: this influences the determination of extra payments for length of service, promotions, prizes or severance pay in the event of dismissal.

Payroll payments

The second block establishes the accruals, i.e., the additional payments received by the worker for different concepts.

There are two types of payments: those that pay social security contributions and those that are excluded from contributions.

The basic salary is not necessarily set arbitrarily by the company, but each professional category has a fixed salary according to a collective agreement. This is only in case the company has a strong trade union.

Therefore, in that case, what makes the difference between the remuneration of one employee and another are the salary supplements. These have different classifications:

  • Personal: they derive from the conditions of the worker. They include seniority, special knowledge and all those that the company wants to include.
  • Job-related: these are additional payments associated with certain positions.
  • For quality/quantity of work: these are performance incentives for objectives achieved, overtime, etc.
  • For periodic maturity of more than one month: this concept includes extra payments and possible shares in the company’s annual profits.
  • In kind: all payments that the worker receives in goods other than money, such as a house, food, etc. It is important to note that the salary in kind cannot exceed 30% of the gross salary.

Welfare payments and social action by companies must also be included in the pay. These do not form part of the salary, but are subject to social security contributions.

This includes all assistance provided by the company to the employee. Finally, we come to the payments that do not pay social security contributions. The most common are travel allowances, mobility expenses and compensation for transfer to another workplace. All of these are considered non-wage payments.

From the sum of the above amounts (basic salary, allowances of all kinds, company social action and non-wage payments) the total amount of remuneration is extracted. This is shown as “total accrued”.


Finally, deductions must be made from what the worker must pay in taxes. In the case of Spain, these are the deductions, for example, for Personal Income Tax (IRPF) and Social Security.

Once these payments to the State have been deducted, the employee’s net income is determined.

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