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Year-End Pay­roll Pro­cess­ing

1 Initial Situation

Reviewing payroll calculations and payments for the accounting year is of great significance. Both bank and cash payments should precisely match the amounts calculated in the payroll. If discrepancies occur, immediate correction is required as no changes can be made after reporting to the AHV (Swiss Social Security) and insurance companies.

Why is it crucial to carefully review payroll calculations? There are several compelling reasons:

  • Employees deserve fair and accurate payroll calculations and corresponding payments.
  • The payroll statement reflects the salaries calculated for each employee, impacting tax obligations. Hence, accuracy is of utmost importance.
  • All social insurance premiums, such as AHV, accident insurance, pension fund, and daily sickness allowance insurance, are based on reported salaries calculated from the payroll for the entire year. Discrepancies between payroll calculations and actual payments may lead to either overpaying or underpaying social contributions. This can become evident during regular AHV inspections, leading to fines, back payments, and high default interest.
  • Differences between calculated and paid salaries lead to discrepancies in accounting. This can cause time-consuming and costly investigations to find the error, burdening the accountant and causing unnecessary hassle. Maintaining a good working relationship with your accountant is crucial as they are a key person in every company.
  • Errors in payroll calculations can undermine employees' trust in the company and lead to dissatisfaction.

2 Step-by-Step Guide for Easy Verification of Payroll Calculations

1. Verify the Correct Payment of Salaries

You will receive a complete list of all calculated wages for each employee from the payroll department, known as the payroll list or payroll sheets. This list shows the salary to be paid for the whole year.

On your bank account, you can search for all salary payments and download the results as a PDF. If you have made cash payments, you should collect all receipts for cash payments. However, we always recommend paying through the bank account as it facilitates the verification process.

It can be helpful to create a table for each employee to track the actual payments made. An Excel spreadsheet is ideal for this task, as it allows you to easily calculate the total amount of payments.

Compare the Payroll Sheets with the Payment List

Place the payroll sheets and your payment list side by side and compare the total amounts. This way, you can immediately identify where discrepancies occur. For employees with discrepancies, look for the month when the error occurred.

Underpaid Amounts

If you have underpaid, the solution is simple. Note the difference for each affected employee and make a payroll adjustment for the difference amount. If possible, do this in December; otherwise, do it in January. Specify in the bank transfer: "Payroll adjustment [Month] Employee Last Name and First Name

Example: Payroll adjustment Feb. 2023, Müller Paul

Overpaid Amounts

If you have overpaid, you can request the excess amount back from the employee. It's important to explain and document this thoroughly to avoid misunderstandings.

Report the difference to the payroll department and ideally deduct the correction amount from the employee's December or January salary. However, note that you cannot retroactively change the payroll as it has already been handed out to the employees (each employee should receive their payroll statement monthly).

An exception exists if the company owner has underpaid themselves. In this case, a retrospective correction can be made, provided the salaries have not yet been included in the financial accounting. Otherwise, it is advisable to make a correction in the last payroll statement of the year.

Early Detection of Errors

The earlier you discover errors, the easier it is to correct them. Corrections within the same year are much simpler than those that go beyond the end of the year.

How to Avoid Errors from the Start:
  • Check the payroll calculations every month and immediately correct any discrepancies in consultation with your accountant or trustee.
  • Report employee entries and exits promptly and correctly. For example: "Exit of Müller Franz on May 31, 2023."
  • Inform your accountant in time about payroll deductions for social insurances such as AHV, BVG, UVG, and KTG. This should be done at the beginning of the year before the first payroll calculation.
  • Submit the salary payments based on payout lists from the accountant or, even better, use an XML file format to send the payments directly to the bank after the salaries have been reviewed and corrected.
  • Report salaries early, ideally by the 20th of the month. Record hourly wages from the 20th to the 20th of the following month to report them immediately to the accounting department. If this is not possible, conduct two separate payroll runs: one for monthly salaries and one for hourly wages.
  • Submit clear and unambiguous payroll reports. If there are changes in work hours or salary increases, note these in the comments.
  • Request medical certificates from employees within two days in case of illness or accident and send copies to the accountant. Then, mention the illness or accident in the payroll report.
  • Communicate clearly and timely with the accounting department to clarify misunderstandings and discrepancies immediately. Remember that a trustee or payroll accountant, who manages a large number of clients, cannot keep everything in mind. It is important to provide clear information for correct payroll processing.

2. Report Employee Entries and Exits Timely

It is of great importance to report entries and exits in a timely manner to ensure correct payroll processing.

The payroll program automatically calculates partial wages for entries occurring after the first of the month. Therefore, it is crucial to know the exact entry date.

The same applies to exits, whether due to resignations, releases, or immediate dismissals. For exits, you should also reconcile the already taken vacation days with the available vacation entitlement to allow for compensation payments for too few or too many vacation days taken.

If there were too few vacation days, the best solution is to grant the employee earlier vacation corresponding to the missing days.

In the case of too many vacation days taken, this can be corrected by a salary deduction.

Use Personnel Lists

The accounting department can generate personnel lists from the system, showing you the entry and exit dates for each employee. Request these lists regularly if in doubt. This allows for quick detection and correction of errors in entries and exits.

3. Reporting Changes in Social Deductions for the New Year

AHV/IV/EO/ALV

The AHV deductions are the same in all cantons. Changes are known to the accounting department and do not necessarily need to be reported. However, it does not hurt to make the report if you receive a letter about it from the AHV.

Pension Fund (BVG)

Ask the pension fund for the lists of pension fund deductions for each employee. The accounting department must consider these deductions in the payroll, so forward them immediately to the accounting department. With salary changes in the new year, there are often also changes in the pension fund contribution.

Note that employees with a monthly salary below 1820 CHF are not subject to pension fund contributions. (Higher earning employees from the age of 17 pay only a risk contribution, and from the age of 25, also savings contributions)

Accident Insurance (UVG)

The accident insurance, whether SUVA or private accident insurers, regularly change their rates. These changes are usually announced in November. Forward these notifications immediately to the accounting department. Otherwise, incorrect deductions might be made at the beginning of the year, leading to time-consuming corrections.

Daily Sickness Allowance Insurance (KTG)

The daily sickness allowance insurance also regularly changes its rates. Immediately inform the accounting department of the new percentages and send a copy of the letter from the insurance company. Note that daily sickness allowance insurance is not mandatory, but most businesses are insured.


If you have not yet forwarded the new rates to the accounting or payroll accounting department, please do so immediately.

In case of doubt, you can call the insurance

Sick Pay Insurance (KTG)

Sick pay insurance rates also change regularly. Immediately inform the accounting department of the new percentages and send a copy of the letter from the insurance company. Note that sick pay insurance is not mandatory, but most businesses are insured.


If you have not yet forwarded the new rates to the accounting or payroll department, please do so immediately.

In case of doubt, you can call the insurance company to inquire if there have been any changes. If not, send an email to accounting to inform them that the insurance company has confirmed that there have been no rate changes.

4 Further Information

Further information on the individual topics can be found at the following links: