Payroll Accounting and Payroll Management in Germany
What is payroll accounting?
Payroll accounting, also known as wage accounting, is a specific sector of accounting. It focuses on the operational handling of payroll administration.
What are the responsibilities of a payroll accountant?
Payroll accounting encompasses various duties such as the preparation of payroll, management of employee master data, maintaining payroll accounts, and reporting necessary contributions like income tax and health insurance. Every employer is mandated by law to prepare a monthly payroll for their employees.
What information is included in a German payslip?
As per the German Industrial Code (Gewerbeordnung, GewO), every commercial employer is required to provide each employee with a comprehensible payslip in euros when disbursing their salary. This is typically done monthly, unless there are no alterations from the previous payroll. However, it is standard to provide employees with a monthly payslip as it serves as a significant proof of document, especially when applying for a loan from a bank.
The contents of a payslip are outlined in the Remuneration Certification Ordinance (Entgeltbescheinigungsverordnung, EBV). Thus, the following information should be available for each employee:
- Name and address
- Date of birth
- Tax identification number
- Tax class
- Employment commencement date
- Social security insurance
- Termination date, if applicable
- Accounting period, tax days, social insurance days
- Income tax category
- Tax allowances, if applicable
- Child allowances, if applicable
What is an immediate report?
Since January 2009, employers in certain sectors have been required to electronically register new employees with the German Federal Pension Fund before their first day of work.
This immediate report applies to the following economic sectors:
- Construction industry
- Catering and hospitality industry
- Passenger transport industry
- Forwarding, transport and related logistics industry
- Entertainment industry
- Forestry companies
- Building cleaning industry
- Companies involved in setting up and dismantling trade fairs and exhibitions
- Meat industry
The immediate report includes the employee's data (surname and first name, insurance number), the employer's company number, and the employment commencement date. If the insurance number is not available, the notification can also include the employee's date of birth, place of birth, and address.
Additionally, employers in the relevant sectors must register all new employees, including office staff and trainees, and notify them in writing about their obligation to carry and present an identification document.
Failure to provide or providing incorrect immediate notification during an inspection is considered an administrative violation and can result in severe penalties.
Our tax consultation services for payroll accounting
Our proficient team of payroll accountants will assist you in all aspects concerning your wages. This includes
- Preparation of immediate reports
- Payroll preparation
- Electronic submission of all evidences to authorities
- Preparation of the notification for the severely disabled levy
- Preparation of reports to the employers' liability insurance association
- Preparation of reports to the pension assurance association
- Assistance/execution of the social security audit
- Assistance/conduction of the wage tax audit
- Supervision/execution of imprest audits
- Supervision/execution of the short-time working allowance check
- Preparation of structural survey reports by the Federal Statistical Office
- Generation of simulations or hypothetical payrolls for prospective employees inclusive of employer charges/expenses
- Digital archive for entrepreneurs and employees
- Consultation on net wage optimization
- Communication with third parties (e.g. tax office, health insurance company, etc.)
- Consideration of individual peculiarities (e.g. garnishment, employer loans, occupational pension schemes, benefits in kind, marginal employment, etc.)
- Digital provision (set-up and execution) of data to banks for the payment of salaries, payroll tax and social security contributions
Drafting of employment contracts
Given a continually evolving work environment, the requirements for the drafting, design and evaluation of employment contracts for managers and employees are consistently escalating. Our experienced employment law attorneys offer you their services in this sector. We have extensive experience in this intricate area of expertise. Given our international orientation, we can also consider cross-border aspects (taxation, social security) when drafting employment contracts.
Outsourcing of payroll accounting
Numerous companies in Germany opt to outsource their payroll accounting, as this provides multiple benefits for companies of a specific size (approx. 20 employees or more):
- Cost efficiency: Outsourcing payroll accounting through our tax consultancy enables companies to minimize costs for recruitment and training of specialized employees as well as for the acquisition and upkeep of software and infrastructure. Instead of utilising internal resources for this, companies can hire external service providers to manage payroll accounting efficiently and cost-effectively.
- Expertise and experience: Payroll accounting necessitates specific expertise and accurate knowledge of the continually changing legal regulations. By partnering with our experienced tax advisors, companies can leverage the know-how and expertise of professionals who are well-versed with the complex requirements of payroll accounting. This minimizes the risk of errors and inconsistencies.
- Time efficiency: Payroll accounting is a laborious task that necessitates regular updates. By outsourcing this responsibility, internal employees can focus on their primary competences and strategic tasks instead of being occupied with administrative tasks. This enhances efficiency within the company and enables better utilization of work hours.
- Data security and compliance: Payroll involves sensitive employee data and is subject to stringent data protection regulations and legal requirements. Reliable payroll service providers have implemented robust security measures and protocols to ensure data confidentiality and compliance with all applicable regulations.
- Scalability and flexibility: Companies that are in a growth phase or experience seasonal fluctuations benefit from the flexibility of outsourcing. External service providers can scale and adjust payroll services according to demand without companies having to allocate additional resources.
By outsourcing payroll accounting to a law firm like ours, companies can reap benefits such as cost savings, expertise, time efficiency, data security and flexibility. Outsourcing payroll also enables you to focus on your core business while ensuring efficient and accurate payroll accounting.
Your payroll accounting consultants in Germany, even for large employee numbers
Our experienced team of tax advisors, payroll accountants, and employment law attorneys are available for all of your payroll concerns. We possess expertise in payroll accounting for a large employee base and are continually enhancing these processes with the most recent digitalization methods and comprehensive training for our staff. Consequently, we can provide our services at a competitive rate and cut down expenses. We would also be delighted to present your company (with roughly 20 employees or more) with an enticing, tailor-made proposal. Simply reach out to us.
The most convenient method to reach our consultants is via e-mail (info@winheller.com) or by phone (+49 69 76 75 77 85 21).
Karoline Bäurle
Tax Accountant, Specialist Wages and Salary (IFU/ISM)
Ayna Hettich
Tax Accountant
Stefanie Schmidt
Tax Accountant
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