How to Calculate Employer Payroll Contributions

The company cannot do without the staff and workers need to be paid the wages. Therefore, all employers are faced with the need to calculate payroll taxes. If you do not want to fall under the penalties, you are required to calculate the required payments of wages in the budgetary and extra-budgetary funds in a timely manner.

Mandatory insurance contributions are paid by the employer for the benefit of wage-workers. The value of contributions is determined as a percentage of payrolls. From these contributions are paid retirement pensions and partly paid sick leaves.


  • 1

    Determine the size of the wage bill for each employee. This value is defined as the sum of wages minus the deductions provided by the State under rules by a certain category of citizens-residents.

  • 2

    In addition, the taxable income of the employee may be reduced by the amount of expenditure on education, treatment or charity. It should be completed and submitted to the tax authorities a declaration confirming the existence of such costs.

  • 3

    Calculate the income tax, which is 13% of the employee's payroll for residents and 30% for non-residents according to the rules followed and practiced by many states and countries across the world. In other words, your employee gets his hands on an amount that is equal to the difference between fixed salary and the tax on personal income. The rest of the payroll taxes are paid by the employer and have no effect on the income of the employee.

  • 4

    Calculate the insurance and storage fees, which are determined at the rate of 26%, which is payable to the Pension Fund. This tax is also known as compulsory insurance. In addition, the employer must calculate the contributions to the Social Insurance Fund, which consist of two parts. One is standard and is determined at the rate of 2.9%, and the other is sent to insurance against occupational diseases and accidents, and depends on the activity of the enterprise. Also, the employer is obliged to pay payroll taxes to the federal and territorial health insurance fund, calculated at a rate of 3.1% and 2%, respectively.

  • 5

    Pay the taxes on wages by the 15th of the month following the settlement. With all of the privileges and exemptions, depending on the type of activity and mode of taxation, the amount of payroll taxes is not less than 34.2% of the total payroll.

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