How To Pay Yourself As a Small Business Owner

Today I'm going to talk about how to calculate employee checks, step-by-step so you'll know how to do it. Okay, let's start from the top. This is called the paycheck formula. The paycheck formula goes like this: We're going to start with taxable wages, which is also referred to as gross pay, minus pre-tax deductions, minus employee taxes, minus after-tax deductions, plus non-taxable reimbursements. This will equal your net pay.

Net Pay = Gross Pay – Pre tax deductions – Employee Taxes – After tax Deductions + Non Taxable Reimbursement

Before you put the paycheck formula into practice let's talk about the ingredients you will need to manually calculate a paycheck. For that, you're gonna need the following items to calculate the paycheck manually:

the employee's hourly rate or salary

Leave a Reply

Your email address will not be published. Required fields are marked *