In the payroll world, everything begins with gross pay. Read on to learn more about gross pay and how it is calculated here.
Your gross pay is your total earnings during a specific period of time before taxes and other deductions factor into the equation. Learning how to calculate gross pay will make you more financially savvy in the long-run.
Gross pay includes overtime, bonuses, and all other monetary compensation you’ve earned within a certain time frame. Not only is it useful to know how much money you’ve made before you pay taxes, but it’s also required for loan applications and other important financial matters.
You work hard for your money. Therefore, you deserve to know how much money you’ve made before anyone else gets a slice of it.
If you want to know how to calculate gross pay, keep reading:
When You Work for a Salary
If you’re a salaried worker, your yearly gross pay is determined by your monthly gross salary. To determine your monthly gross salary, simply take the total you’ve made for a year and divide it by 12. Then add in any extra compensation you’ve received for your work during a specific month.
Calculate gross salary for the year by multiplying your salary by the number of pay periods you had throughout your year. Then add your overtime, bonuses, and other compensation and voila! You have your gross pay for the year.
Weekly/Monthly Gross Pay for Hourly Workers
Calculating any kind of pay for hourly workers is a bit more difficult, but still doable. People refer to an hourly worker’s gross pay as “gross wages.”
Determine your weekly gross pay by multiplying your hourly wage by the number of hours you’ve worked that week. After you’ve added your overtime, bonuses, and other compensation, you’ve arrived at your weekly gross pay amount.
Your monthly gross pay is when you add up each week’s gross pay and other compensation within a given month. You can also learn how to use a pay stub to calculate your wages with the help of this article.
Yearly Gross Income for Hourly Workers
Need to find out your yearly gross pay? Multiply your hourly wage by the number of hours you’ve worked each week. Then take that total and multiply it by 52 to find out your annual gross income.
You could also calculate your yearly gross income by adding up each month’s gross pay throughout the year.
Pay Attention to the Details
Your gross income amount will change depending on the time frame you’re working on. Always define an exact period of time (a week, month, year, etc.) as the context for the gross income you made during that time.
In order for your math to be correct, the numbers you’re using must be correct. Keep track of your financial records, bonuses, overtime, and more to ensure that you don’t forget anything.
Your Money Is Counting on You
There are at least 156.92 million American employees out there. Knowing how to determine your gross pay helps you spot errors in your paycheck that would’ve cost you otherwise.
If you’re self-employed, being knowledgeable about gross income also benefits you. It empowers you to know how much money you’ve made down to the week.
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