Payroll Mexico

Payroll is the list of workers currently employed by a company. Being on the payroll means the individual is working for that company. Employers use it to keep track of salary payments and benefits provided to employees in exchange for their work. It also records bonuses, punctuality rewards, overtime hours, and deductions such as income tax or social security contributions to the Mexican Social Security Institute.

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What is Payroll?

Payroll is a document that must be issued by any company, regardless of its size, for labor oversight purposes. All companies are required by law to prepare a monthly record of remuneration paid to all employees and anyone providing services to them. Additionally, each company must retain a copy of this receipt.

What Information Should a Payroll Include?

There is no official format for this document. Companies must adopt criteria that best suit their needs. However, the following information is essential:

Worker and company identification: Payroll is a personal and non-transferable document. To facilitate verification of a worker's employment status, it must reflect the most important personal data, such as the person's name and ID number.

Additionally, it must contain the name of the institution and its tax identification.

Worker classification: The employee must belong to a category, sometimes regulated by a collective agreement or dependent on the company's human resources, ranging from those on paternity leave, sick leave, trusted employees, permanent and/or temporary contract workers. It also specifies the type of function they perform within the company. Work hours analysis: To document this stage, it is necessary to identify, through attendance controls or more modern methods such as biometrics, the hours worked by each employee, overtime hours, additional completed shifts, or paid breaks, for example. It is also necessary to verify if there were any absences during the month and if they were justified.

When there is justification for absence, such as a medical report in case of illness, the absence can be paid. Otherwise, the deduction must be made from the gross salary. Social charges and income tax deductions: Deductions from the Mexican Social Security Institute must be accounted for to ensure the employee's monthly retirement benefits, as well as other social charges, such as disability and life insurance or retirement, old age, and retirement benefits. Income tax withholding is also included. Salary and compensation: Salary is the compensation due to the employee for the services provided in accordance with the employment contract. This remuneration is, in turn, the sum of the stipulated salary, with other benefits received during the term of the employment contract, which may include commissions, percentages, allowances, and other payments made by the employer.

What Does the Law Say About Payroll?

Payroll goes hand in hand with salary and its calculation, as the results of these accounts must be reflected in it. The Federal Fiscal Code and the Mexican Social Security Institute Law (to mention the most important ones) standardize mandatory deductions that will facilitate the calculation process of the net salary to be received.

If you are looking for information to calculate and keep track of your payroll, or if you are a business owner or professional who, for one reason or another, needs to have a clear understanding of basic payroll concepts, it is important to know that there is no magic formula or easy-to-understand steps in the regulations. This makes it a challenging task.

This calculation requires specific knowledge in the area of human resources and experience with labor laws, as well as notions of financial mathematics in the field of accounting and administration

What Are the Characteristics of Payroll?

This document is a legal obligation of any company, and its omission can lead to harsh legal and tax consequences.

• Keeping this type of document organized is essential to avoid future problems related to labor processes.

• The details listed therein serve as a kind of work history for the employee within the institution where they work.

• That is, the document has operational, accounting, and fiscal functions. It portrays the activity performed and specifically the employee's remuneration.

• It is a documentary requirement for retirement processes, loans, and almost obligatory proof of fixed income for any benefit.

• Its calculation requires specific knowledge, so it is highly recommended to be handled by a personnel department in companies.

• Its calculation is based on what the law stipulates, so it is of utmost importance to be clear if the laws are being complied with and to observe all values accurately.

How to Maintain Payroll Control?

 Correctly calculating the monthly dues and deductions of each worker on the payroll is a necessary task for any company wishing to maintain its legal obligations and have an interest in efficient financial management.

In this way, payroll control every month becomes much easier through the issuance of a sheet or template, where the mandatory data and all the information that human resources considers pertinent will be distributed in an orderly manner.

What Is the Format of a Payroll?

Having a complete format every month gives the company a clear direction on the commitments it has with each employee. This information is important when considering a raise or even making new hires or cuts.

Another detail is that, if paid with variable salaries, this document will be essential. Simply put, it quickly notices the performance of the contracted employee, places the values ​​in graphs, and, if necessary, sees oscillations or sets new goals, with reference to fixed and constant performances.