Payroll service

Basics

A payroll service calculates gross and net wages, taking into account statutory deductions such as Income tax and Social security and generates the corresponding billing documents.

Tasks also include notifications to social security institutions and tax authorities, and the management of Payroll accounts as well as the creation of certificates and annual reports.

Legal framework

The processing of ongoing payroll is legally regulated. A payroll service may only carry out activities to the extent permitted. Tax advice or legal representation is regulated separately.

Systematic classification

• Payroll office
• Payroll service provider
• Payroll service provider
• External payroll accounting
• Employee registration procedure

The term is often used as a general descriptor for outsourced payroll services.

Typical areas of responsibility

• Preparation of monthly payslips
• Calculation of tax and social security deductions
• Reports to health insurance providers and authorities
• Payroll management
• Creation of annual reports and certificates

Typical procedure

1. Transmission of billing-relevant data
2. Billing calculation
3. Creation of billing documents
4. Notifications to authorities and social insurance institutions
5. Provision of evaluations

Practical relevance

In practice, payroll services often operate digitally and with standardised processes. Structured and timely data transmission is a prerequisite for proper payroll processing.

Typical sources of error

FAQ

Conclusion

A payroll service handles the ongoing payroll and salary accounting within the legally permissible framework and is clearly distinct from tax advice.