External payroll accounting

Basics

When it comes to external payroll processing, an external provider takes over the monthly Payroll and associated reporting and documentation obligations. The responsibility for providing correct data remains with the employer.

Organisationally, external payroll accounting differs from internal payroll accounting solely through the execution of ongoing payroll processing by an external service provider.

Legal framework

The processing of payroll is governed by law. External service providers are only permitted to carry out activities within the permissible scope. Tax or employment law advice is regulated separately.

Systematic classification

• Payroll accounting
• Payroll
• Employee registration procedure
• Social security
• Income tax
• Data Protection in Payroll Accounting

External payroll accounting is organisationally part of a company's external accounting.

Typical areas of responsibility

• Performing the monthly payroll processing
• Calculation of tax and social security deductions
• Creation of statutory notifications
• Issuance of accounting documents and certificates
• Archiving of documents relevant to billing

Typical procedure

1. Submission of billing-relevant data by the employer
2. Checking and processing of data
3. Payroll processing
4. Carrying out statutory notifications
5. Provision of evaluations and documents

Practical relevance

In practice, external payroll accounting often takes place in close coordination between the employer and the service provider. Clear responsibilities, defined processes, and regulated data transmission are essential organisational prerequisites.

Typical sources of error

FAQ

Conclusion

External payroll processing is the organisational outsourcing of ongoing salary administration to an external service provider. It must be clearly distinguished from tax advice and is structurally part of external accounting.