What’s The Difference? – Forbes Advisor

Gross pay is the amount an employee earns before all deductions, including taxes, benefits, wage attachments and any other payroll deductions.

Gross pay is noted on a pay stub and should reflect an employee’s salary or hourly wage, 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’re paid a salary of $60,000 and paid twice per month, their gross pay per pay period should be $2,500 ($60,000 divided into 24 pay periods).

How To Calculate Gross Pay

  • For hourly workers: Multiply the hourly wage by the number of hours worked within a pay period. If a nonexempt employee worked more than 40 hours in a week, don’t forget to include the overtime pay rate for the extra hours.
  • For salary workers: Divide the yearly salary by the number of pay periods in a year.
    • If employees are paid monthly, that’s 12 pay periods
    • Twice monthly: 24 pay periods
    • Weekly: 52 pay periods
    • Biweekly: 26 pay periods

If employees are owed commission, reimbursements or bonuses in a given pay period, add the amount owed to their wages to get their overall gross pay.

Pro tip: You don’t have to calculate gross pay or net pay by hand. A payroll service will handle these calculations for you, in addition to sending checks or making deposits into employees’ bank accounts. Payroll services, such as ADP Run or Gusto, make it easy for you to enter pay and deduction information into an employee’s records and paychecks will be calculated automatically each pay period.

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