Payroll calculation in the Russian Federation

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Payroll calculation in the Russian Federation is a procedure for calculating remuneration to employees in accordance with the terms of an employment contract and withholding contributions and tax amounts, as well as documenting these operations. 

Forms of payroll calculation

Based on the legislation of 2021, you can calculate salary in the following forms:

  1. Payments to an employee working on a piecework system;
  2. Payments to a worker who works on the basis of a tariff or salary system for the hours actually worked;
  3. Payment to the employee for the work done as a percentage of the revenue from the sale of goods (services, works) or agency remuneration;
  4. Non-monetary remuneration to the employee;
  5. Material maintenance, which is accrued to municipal employees for the hours worked;
  6. Bonuses and compensations provided for by the current remuneration system;
  7. Additional payments in excess of tariffs, salaries for the qualification class, professional skills, work experience, work with information representing state secrets, knowledge of a foreign language, combination of positions, etc.
  8. Royalties.

These types of salaries can be used one at a time, or several at once in any combination for calculating the official salary.

Types of remuneration

The most popular payment systems in Russia are salary and piecework forms. How is the salary calculated? The amount of the salary or hourly rate is taken and calculated depending on the actual time worked.

Practical calculation methods

In addition, in the process of calculating the compensation payment, it is necessary to take into account the billing periods. Based on Article 136 of the Labor Code, the salary must be paid at least twice a month, so this period should not be more than half a month.

There is another method of calculating wages, in which an hour is taken as a unit of time, not a month. Here, when calculating the remuneration, it is necessary to use the number of hours worked and the tariff rate. The calculation of salary income is determined by mathematical calculations.

Let us turn to the piecework form because this topic often arises when necessary in short-term work. Here, it is not the time worked that is taken into account, but the amount of work done by a person. In this system, the scale can be flat, regressive or progressive-based on the volume of manufactured products, work performed, the amount of sales, and so on.

The payroll is usually done by the lead accountant or financier, whose responsibilities include maintaining accounting records in the company. The calculation of staff remuneration and the calculation of wages by salary refers to economic operations, therefore, this process must be recorded in documents.

Payroll deductions

The salary calculation scheme in the Russian Federation is the same. Only the points of allowances and deductions can differ. Deducting from the monthly salary entails several other economic operations, namely: the salary is calculated directly, personal income tax is calculated and withheld, the advance and the main part of the salary are paid, deductions are made to the Pension Fund. At the same time, each operation must be reflected in accounting, in particular, in the balance sheet of the company.

So, the person who calculates compensation payments performs the following functions:

  1. Analyzes the data appearing in the regulatory documentation on employee labor accounting, and transfers the information to the automated accounting information system;
  2. Registers the facts of the employees’ enrollment, transfer and dismissal from the company, and the performance of their assigned functional duties;
  3. Calculates salary and withholds the tax on the income of individuals, taking into account the deductions required by tax legislation;
  4. Calculates and accrues all taxes and insurance contributions to the budgets and the corresponding funds;
  5. Draws up papers for the payment of salaries to staff.

Every company has a payroll group.

Deductions of taxes from wages

Taxation is a significant element of the salary calculation process. All forms of material remuneration are subject to the tax burden and the need to pay contributions to social funds. First of all, when calculating the salary of employees, personal income tax is deducted, and this tax can currently have different interest rates. 

When personal income tax is calculated

The accounting department charges personal income tax on earnings on the last day of the current month. Withholding of this tax occurs at the time of payment of wages. After that, the accountant has a few days to send the amount due to the budget.

In addition to this tax, salary in our country is under the burden of three social funds:

  • Pension fund; 
  • Social Insurance Fund;
  • Mandatory Medical Insurance Fund.

These contributions also do not have uniform rates, they vary according to the category of the company, and are calculated on the basis of the amount of salary before deducting tax on the income of an individual and are paid from the employer’s money.

The importance of proper salary calculation

Payroll accounting is not only a time-consuming and complex process, which requires a lot of time and a high level of knowledge from the accounting staff, but also a very responsible one. Based on Russian laws, non-payment or late payment of tax deductions and contributions to funds can lead to several sanctions at once. There are administrative, tax, and even criminal penalties.

For example, tax agents (organizations and sole proprietors who, in accordance with the law, are intermediaries in the transfer of taxes for other legal entities and individuals) may be subject to a fine of twenty to forty percent of the amount of the payment (Article 122 of the Tax Code). In case of late payment, penalties are charged (Article 75).

Possible penalties for improper payments to employees

A criminal penalty may be applied in the case of a deliberate disregard for the payment of contributions or a large debt. Individual entrepreneurs and organizations, for example, can be fined from 100,000 to 300,000 rubles.

Some employers do not want to deal with all these issues, because such operations take a lot of time and, most importantly, a lot of money. Calculating the official salary is indeed a burdensome task for the employer. That is why there are firms that provide services for the organizational support of these business operations. Payroll accounting is important for both the employer and the employee.

“Gray” and “black” salary payment schemes, although they are able to unload the salary fund in the short term, and therefore reduce costs in general, will sooner or later turn into problems. The salary in the envelope, as a rule, does not allow you to attract the best human resources available in the labor market.

In addition, tax violations will one day attract the attention of the relevant state bodies. It is always possible to outsource the calculation of wages at the enterprise, that is, to a third-party specialized company that will deal with these issues instead of you for a certain amount.