Payroll Processing

Payroll is one of the most complex and compliance-sensitive operations in any business. AI-native ERP takes a plugin-based approach where the core system stores employee data, compensation structures, and tax configurations, while country-specific calculation logic runs through dedicated plugins. This architecture supports multi-country payroll without code changes to the core system.

Compensation Configuration#

Each employee has a compensation record that defines their pay structure. The system supports salary (fixed amount per period), hourly (rate times hours worked), and commission-based compensation. You can set effective dates for compensation changes, creating a complete history of salary adjustments, promotions, and rate changes over time.

Tax Settings and Deductions#

Tax withholding is configured per employee based on their country, filing status, and personal elections. For US employees, this includes W-4 settings like filing status, allowances, and additional withholding. For Estonian employees, it includes pension tier, tax-free income, and social tax settings.

Deductions cover both voluntary benefits (401k contributions, health insurance premiums, flexible spending accounts) and mandatory obligations (garnishments, child support orders). Each deduction has an amount or percentage, a calculation basis (gross pay, net pay, custom), and start/end dates.

Payroll Processing Workflow#

A payroll run follows a structured workflow. You create a payroll run for a specific pay period, and the calculation plugin reads employee compensation, tax settings, and active deductions to compute gross-to-net amounts for each employee. The results are submitted back to the system for review.

The calculated payroll shows each employee's gross pay, itemized tax withholdings, deduction amounts, and net pay. You review the calculations, approve the run, and process payment. The system generates GL entries that debit salary expense and credit payroll liabilities, tax payable, and net payroll.

Multi-Country Support#

Country-specific payroll logic lives entirely in plugins. The Estonian payroll plugin handles income tax (22%), social tax (33%), unemployment insurance, and funded pension calculations. Additional countries can be supported by creating new plugins without modifying the core system. Tax rates are stored in the database and read dynamically at calculation time, so rate changes require a data update rather than a code deployment.

Tax Declarations#

After payroll is processed, the system can generate tax declaration documents. For Estonian operations, this includes the TSD (monthly tax declaration) in the format required by the Estonian Tax and Customs Board. For US operations, the system tracks 941 quarterly filings and W-2 annual reporting data.