A salary can be termed as an amount that an employee can count on each day he or she is paid. It simply means that an employee who is paid on hourly or weekly or biweekly can calculate their salary per year or day. Such payment can change based on the hours or weeks the employee has worked. For salaried employees, their pay will remain unchanged unless the deductions on their gross income changes. When calculating salary for an employee, you have to consider the cash and non-cash benefits you receive from the employer.
They might be the benefit in kind or car benefits which have to be included when calculating your gross pay. Deductions can be based on loan interest or other contributions you will be making on the monthly basis.
Employees who are not salaried can get bonuses or paid overtime depending on the hours they work. However, for salaried employees, it can be difficult for them to be paid overtime as their salaries are fixed. To calculate the salary of an employee, you have to consider that there are those paid biweekly and hourly and hence the need to consider this before calculating their salary. The following steps will apply:
If you have an employee you pay on an hourly or bi-weekly basis, you can calculate their salary. For example, if you have a yearly salary figure, you can divide the yearly amount by the number of periods relating to the pay periods. For example, for the biweekly, you can divide the yearly amount by 26 (since a year has 52 weeks).
Account For The Deductions
Deductions aim to reduce the gross amount. They may be unpaid leave such as sick leave or personal errands by the employee. It is not advisable to deduct from the gross amount if the employee takes a day off. You can include all the deductions to reduce the gross salary for the employee in arriving at a salary net of the deductions.
You can calculate the deductible amount based on the hours or days the employee was not working by dividing the annual or biweekly amount with the respective periods the employee was not available for work. For example, for an annual salary, you can divide by 52 weeks, then divide the results by 5 working days and finally divide by 8 working hours every day to arrive at a figure.
Make Deductions From The Gross Salary
It will help you arrive at the net salary. Make other tax deduction on behalf of the employee and the government, depending on where you come from. For employees in the USA, there is the Federal income tax, Internal Revenue Service withholding tax, Social Security tax, State income tax, and Medicare tax among other tax and non-tax related deductions.
In most cases, especially for salaried employees, the employer will calculate and file tax returns on behalf of the employee by deducting the amount due to the government. This is how salary for employees is calculated.