How to calculate salary according to the latest Circular 133 2025

How to account for salaries according to Circular 133 is an important accounting process applied to Vietnamese enterprises. Mastering the method of accounting for salaries according to regulations not only helps enterprises comply with the law but also ensures the rights of employees. In this article, 1C Vietnam will provide detailed instructions on the steps of accounting for salaries, handling allowances and deductions according to Circular 133.

1. Overview of salary accounting according to Circular 133

Circular 133 is one of the important legal documents guiding the accounting regime for small and medium enterprises in Vietnam.

Circular 133/2016/TT-BTC was issued by the Ministry of Finance on August 26, 2016 with the purpose of guiding the accounting regime for small and medium enterprises. This document specifically stipulates the principles, accounting methods and ways of recording arising economic transactions, including transactions related to wages.

The principles of salary accounting according to Circular 133 include:

• Record all payables to employees
• Comply with the principle of matching between revenue and expenses
• Accounting at the correct time of transaction
• Classify and track details by labor object

1.1. Who does Circular 133 apply to?

Circular 133 is specifically designed to suit the following businesses:

• Small and medium enterprises according to the law
• Enterprises not subject to Circular 200/2014/TT-BTC
• Enterprises not listed on the stock market
• Limited liability companies, small-scale joint stock companies
• Large scale individual business household

This Circular is suitable for small and medium-sized enterprises because the accounting system is simpler, helping to reduce the amount of accounting work but still ensuring the provision of accurate financial information.

1.2. The role of account 334 in salary accounting

Account 334 plays a key role in tracking amounts payable to employees.

Account 334 - "Payables to employees" is used to reflect the amounts that the enterprise must pay to employees for salaries, wages, bonuses and other payables that are part of the employees' income.

Example: When ABC company pays June salary to employees with a total amount of 100,000,000 VND, the accountant will record:

Debit account 642 "Business management costs": 100,000,000 VND

Credit account 334 "Payable to employees": 100,000,000 VND

When making salary payments to employees:

Debit account 334 "Payable to employees": 100,000,000 VND

Credit account 111/112 "Cash/Bank deposits": 100,000,000 VND

2. Detailed process of salary accounting according to Circular 133

The salary accounting process according to Circular 133 must be carried out in a logical order and with complete steps.

Salary accounting according to Circular 133 includes many steps from calculation, recording to payment. This process ensures accuracy and transparency in salary payment to employees, while complying with tax and insurance regulations.

Step 1: Collect attendance information

• Synthesize timesheets, determine actual number of working days
• Determine cases of leave, sick leave, overtime

Step 2: Calculate salary and allowances

• Calculate basic salary based on contract and actual working days
• Calculate allowances (lunch, gas, phone...)
• Calculate bonuses and overtime allowances (if any)

Step 3: Calculate deductions

• Calculate social insurance, health insurance, unemployment insurance paid by employees
• Calculate personal income tax payable
• Calculate other deductions (advance, penalty...)

Step 4: Accounting for salary-related items

• Record payroll expenses
• Record payables to employees
• Record social insurance and personal income tax payable

Step 5: Pay salary to employees

• Make a payment voucher or payment order
• Record salary payment

2.1. How to record basic salary

The recording of basic salary must be done in accordance with the economic nature of the transaction.

Basic salary is the main amount of money that the company pays to the employee based on the labor contract and actual working time. The calculation of basic salary depends on the employee's working department.

For production staff:

Debit account 154 "Unfinished business production costs"

Credit account 334 "Payable to employees"

For sales staff:

Debit account 641 "Cost of sales"

Credit account 334 "Payable to employees"

For management staff:

Debit account 642 "Business management costs"

Credit account 334 "Payable to employees"

For example: ABC Company calculates July 2025 salary for:

• Production staff: 150,000,000 VND
• Sales staff: 80,000,000 VND
• Management staff: 120,000,000 VND

Accounting entry:

Debit account 154: 150,000,000 VND

Debit account 641: 80,000,000 VND

Debit account 642: 120,000,000 VND

Credit account 334: 350,000,000 VND

2.2. Accounting for allowances and bonuses

Allowances and bonuses need to be accounted for separately to track employee income in detail.

In addition to the basic salary, employees often receive various allowances and bonuses. The way these are accounted for is similar to the basic salary, depending on the employee's department.

Lunch allowance:

Debit account 154/641/642 (depending on the department the employee works in)

Credit account 334 "Payable to employees"

Travel allowance:

Debit account 154/641/642

Credit account 334 "Payable to employees"

Year-end bonus:

Debit account 154/641/642

Credit account 334 "Payable to employees"

For example: XYZ Company Limited pays allowances for August 2025:

• Lunch allowance for production staff: 30,000,000 VND
• Travel allowance for sales staff: 15,000,000 VND
• Sales bonus for sales staff: 50,000,000 VND

Accounting entry:

Debit account 154: 30,000,000 VND

Debit account 641: 65,000,000 VND (15,000,000 VND + 50,000,000 VND)

Credit account 334: 95,000,000 VND

3. Deductions from wages

Accounting for deductions from wages must be done in accordance with regulations to ensure the rights of employees and the obligations of businesses.

From the total income of employees, enterprises must deduct a number of amounts according to the provisions of law before paying the actual salary. Common deductions include:

• Social insurance (8% of basic salary)
• Health insurance (1.5% of basic salary)
• Unemployment insurance (1% of basic salary)
• Personal income tax (calculated according to progressive tax schedule)
• Other deductions such as advances, material compensation...

Accounting procedure for deductions:

• Determine the amount to deduct for each item
• Recorded in the corresponding payable account
• Deduction from payables to employees

3.1. Accounting for social insurance, health insurance, unemployment insurance

Insurance premiums must be accounted for at the current prescribed rates.

According to current regulations, the compulsory insurance contribution rate is divided into the employee contribution and the enterprise contribution:

Employee contribution:

• Social insurance: 8% of basic salary
• Health insurance: 1.5% of basic salary
• Unemployment insurance: 1% of basic salary

Closed business section:

• Social insurance: 17.5% of salary fund
• Health insurance: 3% of salary fund
• Unemployment insurance: 1% of salary fund

Accounting for employee contribution (deducted from salary):

• Debit account 334 "Payable to employees"
• Credit account 338 "Other payables"

Accounting for the part contributed by the enterprise:

• Debit account 154/641/642 (depending on the department the employee works in)
• Credit account 338 "Other payables"

For example: MNP Company has a total salary fund for September 2025 of 500,000,000 VND, of which:

• Social insurance, health insurance, unemployment insurance paid by employees: 52,500,000 VND
• Social insurance, health insurance, unemployment insurance paid by the company: 107,500,000 VND

Accounting entry:

Deductions from employee contributions:

• Debit account 334: 52,500,000 VND
• Credit account 338: 52,500,000 VND

Record the business contribution:

• Debit account 642: 107,500,000 VND
• Credit account 338: 107,500,000 VND

3.2. Personal income tax (PIT) handling

Personal income tax needs to be calculated accurately and deducted before paying salaries to employees.

Personal income tax is calculated on the taxable income of employees after deducting family allowances and compulsory insurance contributions. Enterprises are responsible for deducting personal income tax before paying salaries and paying on behalf of employees.

Personal income tax processing procedure:

Step 1: Determine taxable income

Taxable income = Total income - Social insurance, health insurance, unemployment insurance - Family deductions

Step 2: Calculate personal income tax according to the progressive tax table

Step 3: Accounting for personal income tax

• Debit account 334 "Payable to employees"
• Credit account 333 "Taxes and amounts payable to the State"

For example: Mr. Nguyen Van A has taxable income after deducting deductions of 20,000,000 VND, personal income tax payable is 950,000 VND. Then:

Debit account 334: 950,000 VND

Credit account 3331: 950,000 VND

When paying personal income tax to the tax authorities:

Debit account 3331: 950,000 VND

Credit account 111/112: 950,000 VND

4. Handling errors in salary accounting

Handling errors in payroll accounting must be done promptly and in accordance with regulations.

4.1. Common errors in salary accounting

During the payroll accounting process, accountants may encounter some common errors that need to be noted.

Common errors in payroll accounting include:

Error in calculating actual working days

Misapplication of basic salary or allowances

Incorrect calculation of social insurance, health insurance and unemployment insurance deductions

Incorrect calculation of personal income tax due to incorrect application of tax schedule or family deduction level

Incorrectly accounting for expense accounts (154, 641, 642) depending on the employee's working department

Failure to promptly update changes in salary and tax policies

Lack of valid documents when paying salary

No detailed tracking of each worker

These errors can result in incorrect payments to employees or incorrect tax and insurance claims.

4.2. Accounting error correction process

When errors are detected in payroll accounting, it is necessary to perform the error correction process according to accounting principles.

The process of correcting payroll accounting errors must follow these steps:

Step 1: Identify the error

Analyze the cause and impact of the error

Identify relevant journal entries and documents

Step 2: Prepare adjustment documents

For errors detected during the period: Prepare adjustment documents immediately.

For errors discovered after the period: Make adjusting entries according to regulations.

Step 3: Adjustment accounting

If overpaid: Debit account 334, Credit account 154/641/642

If underpaid: Debit account 154/641/642, Credit account 334

Step 4: Update the books

• Update relevant accounting books
• Adjust financial statements if necessary

Step 5: Lessons learned and prevention

• Build a cross-check process
• Train accounting staff on new regulations

Important notes when correcting accounting errors:

• Do not erase original documents.
• Must have full signature of authorized person
• Keep complete records of adjustments

5. Comparison between Circular 133 and Circular 200 in salary accounting

Understanding the similarities and differences between the two circulars helps businesses apply the correct regulations appropriate to their scale.

5.1. Similarities between the two circulars

Circular 133 and Circular 200 have some similarities in the way of accounting for salaries.

Although applied to different business entities, Circular 133 and Circular 200 still have basic similarities in salary accounting:

Both use account 334 to track payables to employees.

Apply the principle of recording salary expenses to accounts 154, 641, 642 depending on the working department.

The way to handle deductions for social insurance, health insurance, unemployment insurance and personal income tax is similar.

Both require detailed tracking of each worker.

Adhere to the matching principle between revenue and expenses in recording wages

Accounting documents related to salaries have a similar structure.

These similarities facilitate businesses when switching between the two accounting regimes if there is a change in scale.

5.2. Differences in cost recognition

Despite many similarities, Circular 133 and Circular 200 still have significant differences in the way salary expenses are recorded.

In addition, Circular 200 also requires more detailed explanations of salary policies, while Circular 133 allows simpler explanations, suitable for small and medium-sized enterprises.

How to account for salaries according to Circular 133 plays an important role in the financial management of small and medium-sized enterprises. Mastering the regulations on salary accounting helps businesses comply with the law, ensure the rights of employees and provide accurate financial information. From recording basic salaries, allowances to handling deductions such as social insurance and personal income tax, all must be done according to the correct procedures. The differences between Circular 133 and Circular 200 also need to be clearly understood so that businesses can apply the correct accounting regime appropriate to their scale.