Outsource payroll accounting

Basics

When outsourcing payroll, an external provider handles the ongoing salary calculation. This typically includes the calculation of gross and net amounts, and the consideration of Income tax and Social security as well as the creation of the billing documents.

Organisational outsourcing concerns the execution of activities. Responsibility for providing complete and correct billing data remains with the employer.

Legal framework

The processing of ongoing payroll and reporting procedures is regulated by law. External service providers may only carry out activities to the extent permitted. Tax or employment law advice is regulated separately.

Systematic classification

• External payroll accounting
• Payroll service provider
• Payroll provider
• Employee registration procedure
• Data Protection in Payroll Accounting

Outsourcing payroll is an organisational decision within external accounting, with a focus on payroll processing.

Typical outsourcing tasks

• Monthly payroll processing
• Calculation of statutory deductions
• Execution of notification procedures and provision of documents
• Maintenance of master data relevant for billing (based on employer details)
• Archiving of accounting-relevant documents

Typical procedure

1. Definition of responsibilities and interfaces
2. Submission of billing-relevant data by the employer
3. Checking and processing of data
4. Processing payroll and creating documentation
5. Provision of statements, analyses and documents

Practical relevance

In practice, collaboration is often organised through standardised processes and digital data exchange. Clear responsibilities, a reliable data foundation, and a defined process for master data changes are essential.

Typical sources of error

FAQ

Conclusion

Outsourcing payroll means the organisational transfer of ongoing payroll processing to an external service provider. Responsibility for the database and compliance with legal obligations remains with the employer.