Understanding your paystub can be confusing.
Whether you’re an employer assisting your employees, or an employee trying to get a better handle on what all the line items on your paystub mean, let’s take some time to understand what they each mean, specifically referring to the wage types.
Dissecting Wage Types
What are gross wages?
Whether you get paid hourly or are salaried, you’ll notice the gross wages line on your pay stub.
Gross wages refer to the total amount of your wages before any adjustments (withholdings or benefit deductions) are made.
You can calculate your gross pay in several different facets, from pay frequency to per month to per year. If you wanted to determine that number, you could do it manually – you just need a few pieces of information:
- Pay Frequency
- Weekly (52 Pays)
- Bi-weekly (26 Pays)
- Semi-monthly (24 Pays)
- Monthly (12 Pays)
- Annual Salary
- If you’re paid hourly, gather an estimate for the total amount you’ll make for the year.
Then, calculate it:
Or, just use PrimePay’s gross pay calculator!
Here we break down the basics of payroll and everything you need to know to succeed in this realm of your business.
What are net wages?
The gross wages on your paystub will always a bit higher than the number on your paycheck (also referred to as your net pay, or net wages). This is because no adjustments have yet been made.
You may see some of these adjustments on your paystub that are subtracted from your gross wages (please note, this list is not meant to be all encompassing):
- Federal Withholdings
- Social Security
- Local, State, Municipality
- This will depend on where you live. Check out our 2019 Quick Wage & Tax Guide for details about your area.
- Medical Plan
- Dental Plan
- Vision Plan
- Pre-tax Health Benefits
- 401(k) Deduction
Once these items are deducted, you’ll have your net pay – or the amount on your paycheck.
Understanding how much your paycheck will be each pay period can help you budget and plan for the future. You could calculate your net pay manually, but it may be tough based on where you live and different state statutes. Thanks to PrimePay's calculators, you don’t have to do that.
Choose the calculator based on your pay type to calculate your net pay.
Click here to use the salary calculator.
Click here to use the hourly calculator.
Better Yet, Have a Company Handle All Payroll Details for You
Payroll software is designed to organize everything related to employee payment and filing of employee taxes. Once employee wage information and hours are input into the system, the software will perform calculations that result in gross wages and deduct the necessary withholdings.
A basic payroll service will also mail out Forms W-2 and 1099 and handle dealings with the IRS or other government agencies.
The best part? PrimePay can do this all for you – and help to maintain compliance throughout the process. Fill out the form and our sales team will reach out with more information: