You're likely aware of this already (maybe that's why you searched on Google), but payroll is a central concept in managing a business. It measures the total (direct and indirect) cost of employees and plays a key role in the company's financial and strategic decisions. In this article, we'll explain in detail what payroll is and why it is so important.
According to INSEE, payroll is "the sum of gross remunerations paid by a company to its employees over a financial year". In other words, it includes base salaries, bonuses, and employee contributions, but excludes employer contributions and benefits in kind.
Gross payroll represents the total remuneration before any deduction of employer social charges. This includes gross salaries, bonuses, and employee contributions. It is often used for internal decisions regarding personnel cost management.
Loaded payroll includes, in addition to gross payroll, employer contributions and other charges. It provides a complete view of the total cost of employees for the company, which is useful for financial analysis and budget planning.
Payroll is a valuable tool for managing personnel costs. It allows companies to plan their budget, optimise their human resources, and make informed decisions about salary increases and hiring.
Payroll is also used to calculate various taxes, such as the apprenticeship tax and the contribution to professional training. Additionally, it is important for sectoral and regional statistics, helping to compare performances between different companies and sectors.
The calculation of payroll is quite simple: it involves adding up all gross remunerations and bonuses paid over a financial year. For example, if a company paid €1 million in gross salaries and €200,000 in bonuses, its annual payroll would be €1.2 million.
For more details, we have outlined payroll calculation methods in this article.
Some companies may include or exclude specific elements in their payroll calculations. For example, accounting payroll includes employer contributions and paid leave, while budgetary payroll may include redundancy payments without employer contributions.
The number of employees is a direct factor that influences payroll. The more a company hires, the higher its payroll. Conversely, employee departures reduce payroll.
Salary increases and bonuses paid to employees also affect payroll. Every salary review or bonus policy can significantly alter this cost.
Changes in legislation and tax regulations can impact payroll. For example, an increase in employer contributions will raise loaded payroll.
Payroll is an essential element of business management. By understanding how it is defined, calculated, and used, you can better manage your personnel costs and make strategic decisions to ensure your company's financial health.
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