Manual Calculations and the Art of Payroll Math

by Dan

There are a lot of different issues to consider when you have employees working for you. From coming up with schedules to ensuring they have proper lunch breaks and fair treatment, there are plenty of considerations. One of the most important things for you and your employees is payment. All employees need to be paid properly, and the right amount has to be deducted from their checks to pay taxes, insurance, and anything else that needs to come out. That means you’ll have to do some payroll math. But do you know how to do that correctly? Here are some of the main issues to think about.

Hourly Workers and Proper Pay

Making sure you’re paying hourly workers for all the hours they’ve worked is vital to following correct labor laws. These workers need their wages, but they also need to know you’re taking the proper deductions for them. They have taxes which have to come out of their pay and that you need to send into the proper authorities at regular intervals. There could also be insurance that comes out of their check or a court-ordered payment such as child support. Accounting for all of that for each worker can get complicated, but must be done right.

What About Overtime Calculations?

Sometimes, hourly workers end up working for more hours than planned. If they work more than 40 hours per week, they need to receive overtime pay. That’s usually paid at the rate of their hourly wage plus half of their hourly wage for every hour they work. If they work overtime on a Sunday or holiday, though, they might make double or triple their normal hourly wage. Keeping that in mind is vital to ensuring the workers are paid correctly for their overtime and their tax and other deduction issues are handled properly.

Salaried Workers Have Different Needs

When it comes to payroll math, salaried workers can be a little easier. They receive a flat-rate wage, every week, month, or other designated period. If they work overtime they aren’t paid anything extra, but if they aren’t working a full 40 hours they’re still getting paid the same, as well. It’s important to make sure the right deductions are taken from their salary each time it’s paid, but since there are no hourly or overtime calculations it can be much less stressful to pay these kinds of employees.

Statutory and Voluntary Deductions

There are different deductions that have to come out of a person’s wages, and doing the right payroll math to take those things out each time is an important part of the job for the person designated to handle payroll. Statutory deductions include things that have to come out, like taxes. Voluntary deductions could be insurance, a savings plan, or other agreed-upon amounts that wouldn’t have to come out of the employee didn’t want to. These deductions can be stopped by the employee at their request, where statutory deductions can’t.

Getting Help With Payroll Math Confusion

The idea of getting help with payroll isn’t new, and it could be a good idea for any company that has workers. That’s especially true if there are both hourly and salaried workers, or if there are voluntary deductions that have to be factored in. Payroll math can get complicated, but there are software programs and people that can resolve the issue and make sure it’s being handled correctly. Whether you decide to try one of them, or you’d rather do things on your own, make sure you focus on the importance of handling payroll and deductions the right way for all your employees.

 

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