What is Gross Pay?
When you are hired your boss agrees to pay you an hourly rate or gross salary. By coming to work you accept and agree with that offer. In order to calculate your paycheck your employer will take the total number of hours that you worked and multiply it by your rate of pay. The result of this calculation is your gross pay.
What is Net Pay?
Net pay is the amount of money you take home after deductions are made. A deduction is money that is taken out of your paycheck for taxes and employee benefits. Deductions can reduce your paycheck by 20-30%. In the state of Tennessee these deductions will include:
- Federal income tax
- Social Security tax
- Medicare tax
Most states also have a state income tax. However, Tennessee does not have this deduction.
Other possible deductions are for benefits. Benefits are the things other than money that an employer gives you in addition to your hourly salary or wage. Possible benefits that may be deducted from your check include:
- Health/Dental/Vision Insurance
- Retirement or Pension Plan
- Life insurance
- Disability insurance
Your employer may also offer you additional benefits that are not deducted from your check like:
- Discounts
- Vacation
- Sick days
- Holiday pay
Uniforms can be a benefit, but some companies will require employees to pay for or purchase certain clothing for work. It depends on the company.
Assignment: For this module, you will be creating a worksheet in Excel that organizes all of the information below:
Employee 1: Karla Smitts has worked from 8:00-4:30 from Monday through Friday. Her rate is $7.50 per hour.
Employee 2: Fred Johnson has worked from 9:00-4:00 from Tuesday through Saturday. His rate is $7.25 per hour.
Employee 3: Anita Alves has worked from 9:00-5:00 from Monday through Friday. His rate is $7.25 per hour.
Employee 4: