To prepare payrolls for employees in Denmark, a business must first register as an employer (arbejdsgiverregistrering) in addition to its VAT registration. The SKAT Erhverv website can confirm the business's registration status.
Next, a Danish entrepreneur should register with a payroll system such as Bluegardenczy Danløn. To do so, they need to provide the company bank account number and registration number (CVR), and the process takes up to two weeks.
For new employees, the entrepreneur needs to gather information such as their name, address, bank account number, sort code, employment contract, CPR number, and tax card type (frikort, hovedkort, or bikort) to prepare payroll. If there's no agreement with the employee, the employer must inform the accountant about the employment terms (ikke-funktionær or funktionær) to calculate vacation pay accurately.
Lastly, the Danish entrepreneur must provide their accountant with information on wages and salaries, including the number of monthly hours worked, pay period, gross wages for full-time employees, and hourly rates for hourly-paid employees. Failure to provide necessary information, such as employment contracts, can result in financial penalties.