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Gross salary management consists of recording in the accounting the entire salary, including all employee salary deductions and social security contributions.
Unlike net management, this method provides a complete view of salary costs and liabilities toward social institutions.
What is recorded
With gross management, the following are recorded monthly:
- the gross salary
- employee deductions (AVS, LPP, withholding tax, etc.)
- employer’s social security contributions
- liabilities toward social security and insurance institutions (if the accounting is kept on an accrual basis)
- the net salary paid
In gross management, the accounting clearly distinguishes between:
- the employee’s share (deducted from the salary),
- the employer’s share.
The accounting principle
Gross management follows the accrual principle:
Salary costs and the related liabilities are recorded in the period in which they arise, regardless of the time of payment.
Difference compared to net management
Unlike net management, which records only actual payments, gross management records all salary components and the related liabilities.
When to use gross management
Gross management is appropriate when:
- A complete and detailed accounting is required
- You want to monitor personnel costs precisely
- Liabilities toward social security and tax authorities must be recorded
- The accounting is used for analysis and reporting
Accounts normally used
Gross management requires a larger number of accounts compared to net management.
Expense accounts
- 5000 Gross salaries
- 5700 Employer social security contributions
- 5710 Family allowance fund contributions
- 5720 Occupational pension contributions (LPP)
- 5730 Accident insurance premiums (LAINF)
- 5740 Daily sickness allowance insurance
Liability accounts
- 2270 Liabilities to social security institutions (AVS/AI/IPG/AD)
- 2272 Pension fund liabilities (LPP)
- 2273 Accident insurance liabilities
- 2274 Collective health insurance liabilities
- 2209 Withholding tax liabilities
- 2371 Liabilities to employees
Payment accounts
- 1020 Bank
- other Cash accounts
Employer’s share of social security and insurance contributions
In gross salary management, the accounts relating to social security contributions and insurance costs make it possible to clearly identify the portion effectively borne by the employer.
In the dedicated account cards (for example AVS, LPP, accident insurance, etc.), the following are recorded:
- in Debit, the total amounts due to the institutions (employer + employee),
- in Credit, the employee’s share deducted from the salary.
The difference between these amounts represents the employer’s share, i.e. the portion borne by the company as its own expense.
This approach makes it possible to:
- clearly distinguish between company costs and amounts withheld from employees,
- have a transparent view of obligations toward social institutions,
- accurately monitor the impact of personnel costs on the company’s results.
Accounting entry of gross salaries
At the end of the payroll period, the gross salary and the related deductions from employees’ pay are recorded. With gross recording, both the salary cost and the deductions and liabilities toward third parties are recognized.
Example:
- 5000 Gross salaries → Debit
- 1181 Family allowances → Debit
- 5700 AVS/AI/IPG/AD Contributions → Credit (employee’s share, deducted from salary)
- 5720 LPP Contributions → Credit (employee’s share, deducted from salary)
- 5730 LAINF Contributions → Credit (employee’s share, deducted from salary)
- 5740 Sickness contributions → Credit (employee’s share, deducted from salary)
- 2209 Withholding tax liabilities → Credit (fully borne by the employee). The withholding tax deducted from the employee’s salary must be fully paid to the Withholding Tax Office and represents a liability for the company.
- 2371 Liabilities to employees → Credit
Payment of the net salary
If salaries have been recorded when accrued and the payment takes place later, the payment entry is recorded as follows:
- 2371 Liabilities to employees → Debit
- 1020 Bank → Credit
Recording AVS advances and payment
Monthly or at another regular interval, the employer receives from the cantonal AVS office the advance invoices for AVS contributions to be paid. These amounts also include any allowances advanced in the salary of the employee entitled to them.
The advance invoice includes both the employer’s share and the employee’s share.
Recording the invoice:
On 03.01.2026 we record the invoice for AVS advances:
- 5700 Employer social security contributions → Debit
- 2270 Liabilities to social security institutions (AVS/AI/IPG/AD) → Credit
Payment:
On 30.01.2026 we record the payment of the AVS advances:
The contributions are paid according to the invoice, the amount of which is net of any family allowances or other benefits.
- 2270 Liabilities to social security institutions (AVS/AI/IPG/AD) → Debit
- 1020 Bank → Credit
The AVS account plays a central control role:
- in Credit, employees’ salary deductions are recorded
- in Debit, payments to the institution.
The account balance therefore represents the employer’s share.
In the AVS contributions account card (see image), advances paid appear in Debit, while contributions deducted from employees’ salaries appear in Credit. The account balance therefore represents the employer’s share. This presentation makes it easy to verify the correctness of contributions and payments made.
LPP contribution premium and payment
When the annual LPP premium is received, the total cost borne by the employer and the liability toward the LPP insurer are recorded.
When we receive the LPP premium invoice:
- 5720 LPP Contributions → Debit
- 2272 LPP Liabilities → Credit
When we pay the LPP premium invoice:
- 2272 LPP Liabilities → Debit
- 1020 Bank → Credit
Annual accident insurance premium (LAINF) and payment
When the annual LAINF premium is received, the total cost borne by the employer and the liability toward the LAINF insurance are recorded.
When we receive the LAINF premium invoice:
- 5730 Accident insurance premiums (LAINF) → Debit
- 2273 Accident insurance liabilities → Credit
When we pay the LAINF premium invoice:
- 2273 Accident insurance liabilities → Debit
- 1020 Bank → Credit
Annual collective health insurance premium (IGM) and payment
When the annual collective health insurance premium is received, the total cost (including both the employer’s and the employee’s share) and the liability toward the health insurance are recorded.
When we receive the health insurance premium invoice:
- 5740 Daily sickness allowance insurance → Debit
- 2274 Health insurance liabilities → Credit
When we pay the health insurance premium invoice:
- 2274 Health insurance liabilities → Debit
- 1020 Bank → Credit
Payment of withholding tax
The withholding tax, deducted from the monthly salaries of employees subject to withholding tax, must be declared and paid by the employer within the prescribed deadlines. It is borne solely by the employee.
- 2209 Withholding tax liabilities → Debit
- 1020 Bank → Credit
Control and verification
It is important to regularly verify:
- the consistency between accounting and payroll calculations
- the balances of liability accounts toward social institutions
- the payments made
During the year, social contributions are often paid as advances.
Following the final statements from the social institutions, any adjustments are recorded to align costs and liabilities with the amounts actually due.
Advantages of gross management
- Complete view of salary costs
- Greater accounting transparency
- Detailed control of deductions and contributions
- Proper representation of liabilities
Limitations of gross management
- Greater complexity
- More accounting transactions
- Requires more accounts and careful management