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Gross vs. Net Pay

Gross vs. net pay is the amount of money owed to an employee before withholding taxes and other deductions vs. the amount of money an employee is paid after deductions have been taken out. Each pay period, an employer is required to determine an employee’s gross pay, deductions and net pay. 

How to Calculate Gross Pay

There are two formulas for calculating gross pay, one for hourly employees and one for salaried employees. Hourly gross pay is an employee’s hourly rate multiplied by hours worked. Salary gross pay is an employee’s annual salary divided by the number of pay periods. To find net pay, simply subtract tax deductions from gross pay.

Check out this article for more on gross pay and net pay in the payroll process. 


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