Before the first employee, many obligations are quarterly or annual and can be handled together. Once someone is employed, monthly obligations begin and delaying them has consequences.

This article does not cover employment law—that is work for a payroll adviser or employment lawyer. It explains what changes in the accounts and the compliance calendar.

What becomes a monthly obligation

  • Payroll: calculation, delivery to the employee and posting to the accounts.
  • Social security contributions: both the employer's share and the employee's share withheld from pay.
  • Withholdings applicable to the employee's circumstances.
  • Payment, which must be reconciled against the bank like any other transaction.

CASS contributions Caixa Andorrana de Seguretat Social — cotitzacions

How payroll appears in the accounts

Payroll is not a single expense; it contains several figures. The entry only reconciles once you understand that the employer's cost and the employee's net pay are not the same.

  1. 01
    Staff costsThe agreed gross salary, which forms part of the profit or loss for the year.
  2. 02
    The employer's contributionAn additional expense that does not form part of the employee's net pay but does form part of the true cost of hiring.
  3. 03
    Amounts withheldThe employee's share and any applicable withholdings are not expenses. They are liabilities to the relevant bodies until paid.
  4. 04
    Net payThis is the amount transferred from the bank to the employee, and the only one of the four figures the employee receives.

The true cost of a new hire

When budgeting for a new hire, do not use the gross salary alone. Use the gross salary plus the employer's contributions and the cost of administering payroll.

That third element is routinely underestimated. Monthly payroll, payment reconciliation, deadline tracking and a year-end close with an employee all create recurring work that did not exist before.

What to prepare before signing

  1. Confirm with CASS which registrations are required and in what order.
  2. Ask your advisor for the total monthly cost, not the gross amount.
  3. Check that your accounts include the necessary staff-cost and public-body liability accounts.
  4. Set a monthly payday and treat it as a deadline, not just another task.
  5. Store the contract and registrations with the company's records, not in someone's Downloads folder.

Government of Andorra online services Govern d'Andorra — Tràmits en línia

One change that is not administrative

Once the first employee joins, the company's accounts are no longer a private matter for whoever manages them. Another person now depends on payments being made on time.

Internal tasks can be rearranged. Payroll day cannot.