In businesses, salaries are not only payments to employees but also a crucial cost component that directly impacts profits, tax obligations, and the transparency of financial reporting. Therefore, proper accounting for salaries and related deductions is a mandatory requirement in accounting practices.
This article provides a comprehensive summary of the principles, accounts used, journal entries, and methods for handling related transactions. Circular 200/2014/TT-BTC, Circular 133/2016/TT-BTC and update application guidelines. Circular 99/2025/TT-BTC starting from fiscal year 2026.
Overview of payroll accounting and payroll deductions
Payroll accounting and related deductions are the process of recording amounts payable to employees (salaries, bonuses, allowances, etc.) and mandatory deductions (social insurance, health insurance, unemployment insurance, union fees) in the company's accounting system.
This is a recurring monthly accounting task that directly affects:
- Production and business costs
- Obligations to employees
- Tax and social insurance obligations
- Corporate financial statements.
What are wages and payroll deductions?
What is salary in a business?
Wages are the amounts that businesses must pay to their employees, including:
- Basic salary
- Additional salary
- Bonus
- Allowance
- Other payables
In accounting, wages are primarily reflected in account 334 – Payable to employees.
What are payroll deductions?
Deductions from payroll include:
- Social insurance (BHXH)
- Health insurance
- Unemployment insurance
- Trade union funds (KPCĐ)
These amounts are reflected in Account 338 – Other payables and accruals.
Accounting accounts used in recording salaries and payroll deductions.
Account 334: Payable to employees
Account 334 is used to reflect accounts payable and payment status to employees.
The debtor side shows:
- Salaries and bonuses have been paid.
- Deductions from wages
- Transfer of unpaid salary
The side that can be displayed:
- Salaries and wages that need to be paid.
A credit balance reflects the amount still owed to employees.
Account 338: Other payables and liabilities
Account 338 reflects amounts payable to state agencies and related organizations, including:
- Social Insurance
- Health Insurance
- Social Insurance
- Trade union funds
- Other payables.
The "Yes" side shows:
- Provision for insurance premiums and related obligations.
- Record any liabilities that arise.
The debit side shows:
- When paying insurance premiums
- When paying off accounts payable.
A credit balance indicates the amount still due, while a debit balance shows an overpayment or overpayment.
For businesses that do not have a dedicated accounting department, using full accounting service This is the optimal solution to ensure that all payroll, insurance, and tax matters are handled correctly, minimizing errors and saving operating costs.
Principles of accounting for salaries and salary-related deductions.
The most important principle is to allocate costs correctly to the departments using the labor, ensuring that the true nature of the costs is reflected.
Cost allocation by department
Cost allocation accounting by department:
- Account 622: Direct labor costs
- Account 627: General production costs
- Account 641: Selling expenses
- Account 642: Business management expenses.
The principle of matching costs and revenues.
Salary expenses must be recognized in the period in which they are incurred, regardless of when they are paid.
Principles of accrual and deduction
Principles of accrual and deduction:
- Businesses are responsible for social insurance, health insurance, unemployment insurance, trade union fees, etc.
- The employee bears the cost of the deductions from their salary.
In addition, the solution hire accounting services This is to ensure that accounting records, financial reports, and tax obligations are always accurately updated for each accounting period, especially in transactions related to salaries and payroll deductions.
Basis for calculating salaries in businesses
At the end of the period, the accountant calculates salaries based on the following factors:
- Time sheet: Actual number of working days, number of working hours
- Employment contract: Basic salary and allowances based on position.
- Compensation and benefits regulations: Internal company policies and mechanisms for KPI and productivity bonuses.
Guide to accounting for salaries and salary-related deductions.
To help accountants easily systematize and quickly look up transactions arising in practice, below is a summary table of basic journal entries related to payroll accounting and related deductions. The table is presented by specific transaction, along with the corresponding debit and credit accounts, for easy tracking.
| No. | Business content | Debit Account | The account has |
| 1 | Record wages payable to employees. | 622, 623, 627, 641, 642 | 334 |
| 2 | Deduct salary from the bonus fund. | 3531 | 334 |
| 3 | Deduct social insurance, health insurance, and unemployment insurance contributions from expenses. | 622, 623, 627, 641, 642 | 3381 (Social Insurance), 3384 (Health Insurance), 3386 (Unemployment Insurance) |
| 4 | Deductions for social insurance, health insurance, and unemployment insurance from employees' salaries. | 334 | 3383, 3384, 3386 |
| 5 | Pay social insurance, health insurance, and unemployment insurance contributions to the managing agency. | 3383, 3384, 3386, 3382 | 111, 112 |
| 6 | Personal income tax deduction from salary | 334 | 3335 |
| 7 | Pay personal income tax to the State. | 3335 | 111, 112 |
| 8 | Payment by cash/bank transfer | 334 | 111, 112 |
| 9 | Paying wages with goods or products. | 334 | 511, 3331 (if VAT applies) |
| 10 | Advance salary for employees | 334 | 111, 112 |
| 11 | Record the social insurance contributions (sick leave, maternity leave) payable to the employee. | 338 | 334 |
| 12 | Receive social insurance benefits from the insurance agency. | 111, 112 | 338 |
| 13 | Paying social insurance benefits to employees. | 334 | 111, 112 |
As can be seen, all transactions related to salaries, insurance, and personal income tax revolve around key accounts such as Account 334, Account 338, and Account 3335, combined with the expense account system for each department.
Mastering this summary table helps accountants:
- Minimize errors when making accounting entries.
- Accurately allocate costs by department.
- Ensure compliance with the regulations in Circulars 200 and 133, and the guidelines of Circular 99 from 2026 onwards.
This also serves as an important basis for standardizing the accounting of salaries and salary-related deductions in businesses in a transparent and consistent manner.
Accounting for insurance contributions deducted from salary.
When deducting social insurance, health insurance, and union fees from business expenses, the accountant records:
- Debit accounts 154, 241, 622, 623, 627, 641, 642…: Salary subject to social insurance contributions x Total percentage of social insurance, health insurance, unemployment insurance and union fees deducted.
- Account 3383 – Social Insurance: Salary subject to social insurance contributions x Social insurance contribution rate
- Account 3384 – Health Insurance: Salary subject to social insurance contributions x Health insurance contribution rate
- Account 3386 (or 3385 – according to Circular 133) – voluntary insurance: Salary subject to social insurance contributions x Unemployment insurance contribution rate
- Account 3382 – Trade Union Fund: Salary subject to social insurance contributions x Trade Union Fund contribution rate.
In addition, for medium and large-sized businesses, the arrangement of dedicated personnel such as hire chief accountant This helps to tightly control the financial and accounting system, ensuring that the allocation of salary costs, insurance deductions, and personal income tax declarations are carried out correctly and in compliance with current regulations.
Insurance contributions are deducted from employees' salaries.
- Debit Account 334 – Payable to employees: Salary subject to social insurance contributions x 10.5%
- Account 3383 – Social Insurance: Salary subject to social insurance contributions x 8%
- Account 3384 – Health Insurance: Salary subject to social insurance contributions x 1.5%
- Account 3386 (or 3385 – according to Circular 133/2016/TT-BTC) – Unemployment Insurance: Salary subject to social insurance contributions x 1%
- When a business pays insurance premiums to the competent government agency, the accountant records the following:
- Debit Account 3383 – Social Insurance: Amount deducted for social insurance (Salary subject to social insurance contributions x 25%)
- Debit Account 3384 – Health Insurance: Amount deducted for health insurance (Salary subject to social insurance contributions x 4.5%)
- Debit Account 3386 (or 3385 – according to Circular 133) – Unemployment Insurance: Amount deducted for unemployment insurance (Salary subject to social insurance contributions x 2%)
- Debit Account 3382 – Trade Union Fund: Amount paid for trade union fees (Salary subject to social insurance contributions x 2%)
- Accounts 1111 and 1121: Total payable (Salary subject to social insurance contributions x 34%).
Conclude
Accounting for salaries and payroll deductions plays a crucial role in cost management, ensuring obligations to employees and compliance with tax and insurance laws. Accountants need to have a firm grasp of cost allocation principles, the accounting system, and standard journal entries according to current regulations to ensure accurate and transparent data.
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Responsible for production and professional content review by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant NetworkHe is a CPA Vietnam auditor with over 30 years of in-depth experience in accounting, auditing, taxation, and corporate legal consulting.
