Setting up payroll can be confusing and frustrating, but it doesn’t have to be that way! This guide to getting started with payroll in Portugal will walk you through the whole process. From choosing the right payroll software to keeping everything on track; so you get your full tax refunds when you’re due them. Ready to get started? Let’s get going!
What is Payroll?
Payroll is a list of employees and information regarding their pay. Most businesses need some form of payroll, whether it’s for a handful of full-time workers or a team of thousands. The size and complexity of your company will dictate how much work you have to do with payroll and what options are available to you. On top of that, every country has different laws about paying people, so it’s important to make sure you know what is required in Portugal.
How Does it Work?
To set up payroll in Portugal, all employees must be registered with both the Portuguese Tax Authority and Social Security.
The first steps are to get a NIF (Tax Identification Number) and a NISS (Social Security Number). For that, you should contact your nearest Tax office and Social Security office as they are responsible for issuing these documents. Keep in mind that this information will be necessary when calculating monthly payments in taxes as well as mandatory working accident insurance and that every staff member must be under a valid employment contract.
If you do not have time to contact the nearest social security office RHJ Accountants can assist you, please get in touch to find out more.
What Do I Need?
To set up payroll in Portugal, you’ll need to pay attention to a few details; and get yourself a good accountant to help.
As mentioned, the employees must sign an employment contract, which will have most of the necessary information to register in Social Security and FCT (Work Compensation Fund). In addition, you should consider getting a good Software to issue payslips and control the amounts to be effectively paid to the employees, as well as contributions and taxes. Depending on the amount you agree to pay to the employee, the Withholding Tax and Social Security contributions will vary.
What Should I Keep Track Of?
A very important part of payroll in Portugal is your employees’ social security contributions and withholding tax amounts, but there are also other things to keep track of as an employer. You should monitor regular work hours, pay rates (wages or salary), as well as overtime and allowances for meals, Christmas and vacation leaves. Tax deductions can vary, so be sure to clarify with your accountant if you’re unsure how to proceed.
At RHJ Accountants, we’re always happy to assist you.
Using an Accountant When You Have Payroll
Managing payroll in Portugal for a small business is not particularly difficult. However, hiring an accountant to help you out can definitely be worth it if you have a number of employees; or you need help with managing payroll for your expat employees. Make sure to ask around and do some research before settling on a person or company; we recommend having more than one firm quote you on services. And if all of that sounds like too much work, consider outsourcing your payroll to RHJ Accountants instead. Getting started with payroll in Portugal will be much easier if we can help you.
If you still want to learn more; we have another blog article that explains local laws and requirements related to employment benefits, compensation and taxes. Click here to read it.
How RHJ Accountants Can Help
We recognise more than ever that individuals and businesses from the UK and other countries may be globally mobile. We aim to make you aware of the tax-efficient opportunities, available tax relief and structure finances for life at home and abroad.
Our international team of specialists operate from offices in the UK and Portugal. We work together synergistically to provide tax efficient solutions to our clients to help them grow their business whilst keeping tax liabilities to a minimum.