How to Calculate Payroll

Payroll is the total amount of all financial records of salaries, allowances, bonuses and salary of an employee in an organization. It is necessary to know how to calculate payroll for each employee. Payroll and the amount that is paid to employees for work they have done for the organization during a certain period of time.

In this article you will learn about how to calculate the payroll in a few easy steps. 

Steps to calculate 

In the first step, you calculate your gross salary. You can do this by multiplying your salary by 12, which is to find your annual income. For example, if you earn $ 4,000.00 per month, then you should multiply that amount by 12 to calculate annual salary. Now you will find an amount to be $ 48,000.00.

Now you must take this amount is $ 48,000.00 and divide it by 52. This is so because there are 52 weeks in the entire year. It is not necessary that a month will contain only 4 weeks. After that, you will find the amount to be $ 923.08 per week. It should be remembered that this is the gross salary and not pay.

After calculating the weekly rate, you must calculate the hourly wage. Now you should take $ 923.08 and divide that amount by the number of hours you worked. Suppose that the number of hours worked is 40 hours. Now, divide $ 923.08 by 40. You will get an amount of $ 23.07 an hour after this calculation. Now you've got your standard rate is $ 23.07 per hour.

Sometimes we get paid for overtime. In this case, we should learn to calculate overtime. You must take your hourly rate of $ 23.07 and multiply that amount by 1.50 (OT rate per hour). Now you find that your salary is $ 34.61 OT per hour for overtime (hours worked over 40 hours).

Sometimes we get double pay. Some employers give double pay for Sunday work. This amount will be calculated the same way, we calculated OT. You must take your hourly rate and multiplying this rate by 2. This will increase your salary will be $ 46.14 TND per hour.

Suppose you worked for 45 hours in your first week of employment. Now, the calculation will

$ 23.07 * 40 = $ 922.80 

Overtime Pay = $ 34.61 * 5 = $ 173.05

Now you must add two regular wages and overtime pay 

$ 922.80 + $ 173.05 = $ 1095.85 

This amount is your gross income for the first week of your employment. 

Now you should start calculating deductions. Consider first deduct the federal income. You should receive your federal income tax table. It is suggested to find the federal income tax you sheet according to marital status. If you are single, you should seek only the sheet and if you're married, you must find the sheet of the couple.

Discover your income and should be in the range of 1095.85. For example, if it is greater than or equal to 1000 but less than or equal to 1500, then it will be the range you want to use. This range is arranged in two columns that are on the left side of form.

Now you need to know how many dependents you are claiming. What is said to be the source allocations. You must find your level of income and new cleavages among dependents, then you get what you have to deduct federal income.

For social security, there are a defined rate of payment, if you go beyond your social security will not be accepted. The amount of social security is approximately $ 100,000.00 per year. If you're already $ 100,000 per year then you already know how to calculate payroll or you would have someone do it for you. It should be noted that the rate of social security is still 6.2% and the rate of health insurance is still at 1.45%.

Now you need to take your income has been deducted from social security. What is

1095.85 * 6.2% = $ 67.94 

For Medicare, you must calculate that 

1095.85 * 1.45% = $ 15.89

$ 15.89 should be deducted for Medicare.

Now that you have to summarize all the deductions. Is:

$ 67.94 + $ 15.89 + tax federal income deductions = Total

Now, the last step, you deduct your total deductions from your gross income to determine the amount of your net income or home pay amount.

Tips & Warnings 

State income tax can not be provided. You should get these rates in the Department of Revenue of your state or the webpage itself.

All other deductions such as insurance, etc. charity or contributions should be added to the deductions to get just pay.

Pre-retirement are taxed should be subtracted from gross income before taxes are deducted.

Payroll is easy, but it needs a lot of data and information, and should also be precise. It is very important to know how to calculate the payroll for both the employer and employee. I hope this article would have helped you in the same.