Payroll Outsourcing

Payroll Outsourcing and HR services are very sensitive area of accounting, because you should be confident that employees get what they have earned, taxes are calculated and paid correctly, the confidential data are protected.

Following the legislation in Ukraine is more challenging than in western countries, rules and regulations may vary few times a year and are not available on the internet in English. Sometimes they are not clear and leave room for interpretation. That is why it is better to outsource payroll services from to reliable service provider, such as The Kyiv Accounting Group. 

Our well educated, experienced staff and strong internal control system ensure that a major error is less likely to occur. The Kyiv Accounting Group is a trusted source for payroll outsourcing, human resource and related services. We provide a flexible payroll solution for HR outsourcing that will meet your business needs. Your employees will be accurately paid in time, while you can focus on achieving the main goals of your business. 

Our standard payroll outsourcing services and HR administration include (but not limited):

  • advising on employment and labor legislation; 
  • payroll accounting and payroll taxes calculation;
  • preparation and submission of obligatory monthly and quarterly reports (management statements, if needed) to statistical offices, tax offices, labor funds; 
  • Arranging timely payment of wages, salaries and deductions (Income Tax, Military Duty and Social Insurance Contribution);
  • Administering leave, expense claims, keeping track of personnel’s’  vacations, sick-leaves, etc.;
  • HR administration, filling in Employment Record Books, dealing with internal orders regarding company`s employees. 

Basics of payroll calculation in Ukraine 

There are few ways employers can determine gross wages and employee’s net pay. It can be done by hand, using excel table, online payroll calculator or special payroll software. Alternatively, as it mentioned above, they may choose to outsource entire payroll process by hiring one of the payroll companies which are presented in Ukraine.

Payroll accounting process consists of the following 5 stages:

  1. Determination of an income for time worked (as a rule, it is a wage rate per month);
  2. Income calculation for a nonworking time (a vacation, sick, maternity leave etc.); 
  3. Salary taxes / contributions determination; 
  4. Salary and related taxes payments processing; 
  5. Preparation and submission of payroll related reports. 

Typically, salaried workers are paid fixed monthly wage, which is their gross regular pay. Once gross regular pay is calculated we subtracted payroll deductions from it.  

Statutory payroll deduction in Ukraine is personal income tax (PIT) at 18% and military duty with 1.5% (MD). These are items that employer determined and paid on behalf of the stuff. 

Employer, then, has to calculate the amount of Social Security Tax (contribution) to pay. It is a fixed percentage of an employee’s gross pay. Current tax rate for Social Security is 22%%. The maximum amount of wages subject to Social Security tax is 15 minimal wages (or 55,845.00 UAH). An income exceeding 15 minimal wages is excluded from taxation under UST. No Social Security Tax (contribution) is deducted from workers’ salary. 

Formula for salary calculation is Wage rate – PTI – MD= Net pay.

Wage rate + wage rate* SST = companies expenses 

Illustration

If employees gross monthly salary is 10,000 ₴. PIT would be 1,800 ₴ and MD would be 150 ₴. Net pay in this case would be 8,050 ₴. Total company`s expenses related to salary would be 12,200 (wage rate 10,000 ₴ + SST 2,200 ₴). 

HR documentation and human resource services in Ukraine

Human resource documentation primary recording is obligatory here. Every company regardless its size, ownership, legal form shall keep a primary recording of HR documentation. The correct drawing together with keeping of human resource documentation is an indicator of transparency in the labor payment sphere. The laws in this sphere differ from the Western one, penalties for labor laws violation can reach several thousands. As a result, HR services is becoming more and more popular in Kyiv. 

Human resources services are one of our main activities. HR outsourcing includes:

  • New employees formalization, submission of a notification into the fiscal state bodies;
  • Staff schedule preparation, vacation, termination, work trips orders;
  • Management of vacation requests, travel expenses reimbursement, inspection for personnel vacations and certificates of work incapacity, etc.;
  • Administration and keeping of Employment Record Books;
  • Submission of income certificate to pension fund, other state bodies, and visa centers. 

If you are interested in payroll outsourcing company or human resource services in Kyiv (Ukraine), please let our certified specialists help you!