Payroll in China: Monthly Process, Deadlines and Compliance Checklist

TL;DR

• China payroll is a monthly control process, not a salary spreadsheet. Employment terms, attendance, bonus, reimbursements, individual income tax, social insurance, housing fund and bank payment must reconcile.
• There is no single national payroll calendar for every employer. The salary date comes from the contract and company rules; IIT withholding information is generally reported in the following month, while contribution dates and procedures must be confirmed locally.
• A reliable payroll separates input preparation, approval, calculation, review, payment and filing. The company should retain the evidence even when an outside provider performs the calculations.

If your China entity is setting up or repairing its payroll process, talk to ChinaBizPro about a controlled monthly calendar that connects HR, finance, tax and local contribution work.

Why payroll errors spread beyond salary

One incorrect employee change can affect the employment contract, bank transfer, individual income tax (IIT) return, social-insurance base, housing-fund record, general ledger and management reporting. A correction made only in the spreadsheet may leave the other records wrong.

The process should start with an approved source of truth. HR owns employee changes, managers approve variable inputs, payroll calculates amounts, finance reviews totals and an authorized team completes payment and filings. Even in a small company, a second person should review sensitive changes and the final bank total.

For the wider employment setup, see the China hiring guide for foreign companies. For month-end controls and record retention, use the WFOE accounting and compliance checklist.

Build the monthly payroll calendar backwards

Start with the contractual salary date and the local filing calendar, then set internal cutoffs early enough for review and correction.

Stage	What must be complete	Control evidence
Employee-change cutoff	Joiners, leavers, salary changes, bank details and contribution changes are reported.	Approved change form and effective date.
Time and variable-pay cutoff	Attendance, leave, overtime, commission, bonus and approved deductions are final.	Manager approval and source report.
Calculation	Gross pay, taxable items, employee deductions and employer costs are calculated.	Payroll register and exception report.
Review	Headcount, unusual movements, net-pay total, IIT and contributions are checked.	Reviewer sign-off and variance explanation.
Payment	Salary file is approved and released to employee accounts.	Bank instruction, approval and payment result.
Filing and contribution	IIT withholding and applicable social-insurance and housing-fund work are completed.	Filed return, payment record and contribution statement.
Close and archive	Payroll is posted, reconciled and stored under restricted access.	Journal, reconciliations and final payroll pack.

Do not place every cutoff on the salary date. Leave time to investigate duplicate employees, changed bank accounts, unexpected bonuses and material differences from the prior month.

Which deadlines are fixed, and which are local?

Salary payment date

The employment contract and employer's lawful rules should state a regular payment date. Wages should be paid in monetary form and on the agreed schedule, generally at least monthly for monthly-paid employees. Consider holidays, bank processing and local rules.

IIT withholding

The employer is normally the withholding agent for China payroll. Full withholding information is generally reported within the first 15 days of the following month. Resident salary calculations commonly use the cumulative withholding method, so year-to-date data must carry forward accurately.

Do not treat the 15th as an internal preparation date. Payroll should be approved earlier, leaving time to resolve employee identity, deduction, system and payment issues.

Social insurance

An employer should arrange social-insurance registration within 30 days from the start of employment and pay contributions in full and on time. Rates, bases, caps, portals and collection dates are local and can change.

Housing fund

Housing-fund onboarding, base changes and payment procedures are also local. Some employers combine contribution work with the payroll calendar, but the account, cutoff and correction process should be confirmed with the local housing-fund center and company bank.

Gross-to-net checklist

For each employee, the calculation should address the items that actually apply:

• Contractual base salary and effective date.
• Taxable bonus, commission, allowance and benefit items.
• Approved attendance, leave, overtime and unpaid absence.
• Employee social-insurance and housing-fund deductions.
• Employer social-insurance and housing-fund costs.
• IIT withholding and year-to-date cumulative data.
• Lawful deductions supported by agreement or policy.
• Reimbursements supported by a business purpose and required evidence.
• Final-pay items for a leaver, including unused amounts or severance where applicable.
• Net salary, employee bank account and payment currency.

Separate reimbursement from compensation. A payment does not become non-taxable merely because it is called an allowance or supported by a fapiao. The business purpose, policy, evidence and applicable tax treatment all matter.

Eight-step monthly payroll process

1. Lock the employee master file

Maintain one controlled list with employee ID, legal name, start date, contract status, work city, bank account, salary, contribution location and tax identifiers. Restrict who can edit it and record every change.

2. Collect approved changes

Use standard forms for hires, departures, salary changes, bonus, unpaid leave and bank updates. Verbal instructions and private messages should not be the only evidence for a payroll change.

3. Validate attendance and variable pay

Reconcile attendance, leave and overtime to manager approvals. Check commission and bonus against the approved plan and calculation period.

4. Calculate payroll

Calculate gross pay, taxable income, deductions, IIT, employer cost and net pay. Preserve the system version or worksheet used for the final calculation.

5. Run exception checks

Compare headcount and totals to the prior month and approved budget. Investigate new bank accounts, duplicate accounts, negative net pay, large movements, zero pay, manual tax overrides and employees paid after departure.

6. Approve and release payment

Separate preparation from bank approval where possible. Reconcile the approved payroll register to the bank file before release and review rejected or returned payments afterward.

7. Complete filings and contributions

Use the final approved payroll data for IIT, social-insurance and housing-fund work. Record any timing or basis difference instead of silently changing one system.

8. Post and reconcile

Post salary, employer contributions, employee deductions, IIT and payable balances to the general ledger. Reconcile the payroll register to bank payment, filing records and the balance sheet, then close the monthly pack.

Payroll records to retain

A complete monthly pack normally includes:

• Approved employee changes and supporting contract amendments.
• Attendance, leave, overtime and variable-pay approvals.
• Gross-to-net register and employer-cost report.
• IIT calculation and filed withholding information.
• Social-insurance and housing-fund statements.
• Bank payment file, approval and payment result.
• Payroll journal and balance-sheet reconciliations.
• Exception report and correction log.
• Employee payslips delivered through an appropriate secure channel.

Payroll data contains identity, compensation, tax and bank information. Give managers only the information they need, encrypt transfers to service providers and remove access promptly when an HR, finance or provider contact leaves.

Joiners, leavers and special payments

Joiners

Confirm the legal start date, signed contract, bank account, tax identity, contribution city and first-month proration rule before cutoff. A mid-month hire should not be handled by an improvised formula that conflicts with the contract or company policy.

Leavers

Coordinate the last working day, salary, approved deductions, expense claims, bonus treatment, unused leave, severance where applicable, tax and contribution offboarding. Do not remove the employee from the master file before the final reconciliation is complete.

Annual bonus and equity-related income

Confirm the payer, plan terms, approval, tax treatment and reporting period. Cross-border equity or recharge arrangements may require separate tax, foreign-exchange and accounting analysis.

Foreign employees

Nationality does not remove local payroll questions. Review the actual employment, days in China, income source, cost bearing, treaty position, social-security agreement and local practice.

Common payroll mistakes

1. Using separate HR, payroll and finance lists with no controlled employee master file.
2. Accepting salary, bonus or bank changes without documented approval.
3. Treating every allowance or reimbursement as tax-free.
4. Applying one social-insurance base and rate table to every city.
5. Calculating payroll on the salary date with no review window.
6. Allowing the preparer to approve the bank file without independent review.
7. Filing IIT from a different version of the payroll register.
8. Paying a leaver without reconciling final salary, deductions, expenses and contribution status.
9. Letting an outside provider control the only copy of payroll records and portal credentials.
10. Posting only net salary to the ledger and leaving tax and contribution payables unexplained.

Frequently asked questions

Must every company pay salary on the same date?

No. The regular date should be set in the employment documents and comply with applicable wage-payment rules. The company then needs an internal cutoff that allows calculation, review and bank processing before that date.

Is IIT filed in the same month as salary is paid?

Salary withholding is generally reported and remitted on the statutory following-month timetable. The precise tax period and treatment should match the payment facts and current electronic tax system. Payroll should not wait until the filing deadline to finalize its data.

Can payroll be outsourced completely?

A provider can calculate payroll and assist with filings, but the employer still owns employee facts, approvals, funding, account access, data protection and management review. The company should receive the final register, filings, payment evidence and unresolved-items list every month.

How should a payroll error be corrected?

Identify every affected record: employee payment, payslip, IIT, contributions, ledger and management report. Approve the correction, follow the relevant portal process and retain a correction log. Changing only next month's net pay can hide rather than resolve the original error.

Official references

• Social Insurance Law of the People's Republic of China
• Regulation for the Implementation of the Individual Income Tax Law
• State Tax Administration Policy Database
• National Database of Laws and Regulations