Payroll

Payroll is the worst possible place to be vague about what software does, so here’s the important part first: this applies the rates you set up. It doesn’t know your country’s tax. There are no tax brackets built in, no thresholds, no contribution ceilings.

What it does do is take your contracts and your components, apply them the same way every single month, show its working on every line of every payslip, and post an entry that balances.

What you can do

• Keep employment contracts with hours, salary, and the period that salary is quoted in.
• Set up your own components: earnings, deductions and employer costs, as fixed amounts or percentages.
• Run a pay run for a month, then calculate it, check it, approve it, post it and pay it.
• Give everyone a payslip PDF that shows how each line was worked out.
• Have the journal written for you, balancing by construction.
• Pay people and clear the liability, separately from recognising the cost.
• Send a run back to draft to fix a contract, as long as it hasn’t reached the ledger.
• Look up anyone’s pay history in one place.

How it works in practice

Start with the contract (HR → Contracts). Start date, an end date if there is one, weekly hours, base salary, and whether that salary is monthly, annual or hourly.

A pay rise is a new contract, not an edit. That’s what lets a payslip from two years ago still explain itself, and it’s why a pay run picks up whichever contract covers the period it’s paying.

Describe what you pay and what you withhold (HR → Payroll components). Each component is an earning, a deduction or an employer cost. It’s either a fixed amount or a percentage, it points at one of your own ledger accounts, and it’s marked taxable or not. These are yours to define: your allowances, your pension rates, your local contributions as your accountant has given them to you.

Open the run and calculate it (HR → Pay runs). Calculating builds every payslip from scratch, and it’s safe to do again as often as you like. Fix a component, recalculate, look again. That’s the normal working loop, not a repair job.

Read one payslip properly before you trust the whole run. Every line shows the rate it used and the base it applied that rate to, so a payslip proves itself instead of asking to be believed. Gross, net and employer cost are shown separately, with employer cost clearly marked as something the employee doesn’t receive.

Then approve, post and pay. Three separate steps, in that order, because they mean three different things:

• Approve says a human has checked the figures. An empty run can’t be approved.
• Post writes the payroll journal: salary and employer costs as expense, net pay and deductions as liabilities.
• Mark paid records that the transfer has gone, clearing the net pay owing. Only the net. The deductions stay as liabilities until you actually hand them over, because that’s what they are.

Correct it before it reaches the ledger. A run can go back to draft while you fix a contract or a component. Once it’s posted it’s in your books, and deleting it is refused. At that point a correction is a correction, made the way you’d make one anywhere else.

Part months work themselves out. Someone who starts or leaves mid-month gets paid for the part of the month their contract covers, and their payslip states the days it was based on, so a short slip explains itself instead of looking like a mistake.

Good to know

• No statutory tax, for any country. No brackets, no thresholds, no allowances, no ceilings. You set up your own rates as components and payroll applies them consistently. We’d rather say this plainly than ship a plausible-looking default rate, because a plausible-looking default rate produces a payslip somebody files. If you need statutory withholding calculated for you, use a payroll bureau or a local provider, record the results here, and take advice on where the responsibility sits.
• You’ll need the Operations extension switched on (Settings → Extensions), the same one that covers projects, timesheets and the employee register.
• A percentage component is always a percentage of taxable gross, never of a running subtotal. Otherwise two people on identical terms could get different payslips purely because their components happened to be worked out in a different order.
• Employer cost never counts towards net pay. It sits on top of everything, in neither gross nor net. Get that wrong and every bank transfer comes out too big by the employer’s own contributions, while the payslip still appears to add up.
• Fixed components only prorate if you say so, and the default is off. A monthly travel allowance probably should shrink in a part month. A signing bonus or a loan repayment absolutely should not.
• There are no formula components. A component is a fixed amount or a percentage of taxable gross. Anything more involved has to be expressed as several components.
• One currency per run. A contract in a different currency isn’t converted.
• The payslip PDF is a payslip, not a designed document. It doesn’t use your invoice layouts, because there’s no customer to impress and nothing on it to brand.