What is the difference? – Forbes Advisor
Gross pay is the amount an employee earns before all deductions, including taxes, benefits, wage garnishments, and any other payroll deductions.
Gross pay is noted on a pay stub and should reflect an employee’s salary or hourly wages, plus reimbursements, bonuses, commissions, and overtime pay. For example, if their pay is $20 per hour and they worked 40 hours in a pay period, their gross pay should be $800 for the pay period. If they receive a salary of $60,000 and are paid twice a month, their gross salary per pay period should be $2,500 ($60,000 divided into 24 pay periods).
How to calculate the gross salary
- For hourly workers: Multiply the hourly wage by the number of hours worked in a pay period. If a non-exempt employee worked more than 40 hours per week, be sure to include the overtime rate of pay for the overtime.
- For employees: Divide the annual salary by the number of pay periods in a year.
- If employees are paid monthly, that’s 12 pay periods
- Semi-monthly: 24 pay periods
- Weekly: 52 pay periods
- Bi-weekly: 26 pay periods
If employees receive commissions, reimbursements, or bonuses during a given pay period, add the amount owed to their salary to get their overall gross salary.
Pro Tip: You don’t have to calculate gross salary or net salary by hand. A payroll service will take care of these calculations for you, in addition to sending checks or making deposits to employee bank accounts. Payroll services, such as ADP Run or Gusto, allow you to easily enter payroll and deduction information into an employee’s records and pay checks will be automatically calculated each pay period.