You have just decided to hire your first employee, or maybe you are already employing staff. To ensure the ‘technical’ side of being an employer runs smoothly, it is important to have proper payroll administration. This article will show you what to take into consideration.
First, you have to draft a labor contract. This contract contains the made agreements between you and the employee. For example, work times, sick leave, vacation days, the nature of the job, the length of the contract and such. Make sure when drafting the contract that certain legalities are added to the contract. Sometimes you will be obligated to adhere to the applicable rules regarding the collective labor agreement. We would be happy to info [at] lupacompany.com (help) you out with this
If you wish to terminate the labor contract, pay attention to the notice period. If you are too late with the notice, the employee will be entitled to an additional month of pay.
When you pay your employees, you are obligated to keep up with the payroll administration. The payroll administration consists of various calculations and documents: payslips, annual statement, and salary statements.
It is also possible to compensate your employee for other compensations and provisions. For example, subscriptions to professional literature, public transport, consumption during work time and such. It is legally determined whether or not these compensations are part of the employee’s salary or if they are exempt within the labor expense regulation. As an employer, you are obligated to include these compensations and provisions to your administration. You can read more about the labor expense regulations here.
Always request an employer’s identity document. It is also important the employee files the form for payroll tax benefits. Then you will know whether or not the payroll tax benefit is applicable in the payroll taxes. The identity document and the form payroll tax benefit are part of the administration.
The employee is entitled to a written overview of the pay per payment periode. This is the payslip or salary specification. The payslip mentions the gross pay, what has been deducted, what period the payslip is for, etc.
It is important that at the least the minimum wage is paid. If you are using a collective labor agreement make sure you keep in mind that salaries will rise periodically and that the salary of your employee will need to be adjusted.
Tax Authorities and payroll taxes
If you do not a have payroll tax number, request one at the Tax Authorities. If you have received your payroll tax number, you are officially an employer for the Tax Authorities and a withholding entity for the payroll taxes. This means you will need to submit periodic declaration payroll taxes
You will need to withhold payroll tax and premiums for social securities. Therefore your employee will not receive the gross amount, but a net amount of which the payroll tax and premiums have been deducted. Those payroll taxes and premiums you will pay to the Tax Authorities.
As an employer you also owe premiums for employee insurances. This is partially deducted from the wages of your employee, but a part of this is the ‘gross-gross’ part of the wages. These are the payroll expenses that you will need to pay in addition to the gross pay of your employee.
You can agree with your employee that you will withhold pay for pensions or other arrangements. This can easily be added to the payroll administration.
Do you have questions regarding the payroll administration or would you rather have us do it? Please do not hesitate to contact us at info [at] lupacompany.com or +31204123507