PAYCHECKS, PAY PERIODS, TYPES OF PAY

Pay Periods

In order to understand your paycheck, you need to understand pay periods.

How often you get paid.

PAYCHECKS

Gross Pay vs. Net Pay Gross is total pay before

deductions. Net Pay is TAKE HOME Pay, or Pay

after deductions

DEDUCTIONS

DEDUCTIONS

NET PAY

What are examples of some deductions?

Social Security, Federal, State and Local Income taxes.

Medicare, Health Insurance, retirement plans, pre-tax savings plans (401k, etc)

Pay Periods and

Types of Pay

Weekly

Duh How many weeks are in a year? 52 weeks in a year 52x a year

Monthly

How many times per year would you get paid if you got paid monthly?

12x a year. Not so common.

Most employers…

Use either every two weeks or twice a month?

Same thing right…? NOT REALLY.

Every Two Weeks (Every other Friday)

Twice a Month (15th and 30th or the month)

Biweekly

Every two weeks AKA Every other Friday How many times are you paid a

year if you are paid Biweekly? 52 weeks a year, 26 paychecks.

Semimonthly

AKA Twice a month AKA “The 15th and 30th” How many times a year are you

paid if you are paid ‘semi-monthly’ 12 months a year,

2x a month = 24x a year.

What’s a better deal? 2,000 a paycheck, paid semimonthly.

24 x 2000 = $48,000 2,000 a paycheck, paid biweekly

26 x 2000 = $52,000 a year. $1500 a paycheck, paid semimonthly.

1500 x 24 = 36,000 a year $1400 a paycheck, paid biweekly.

1400 x 26 = 36,400 a year

TYPES OF PAY?

How do people get paid?

Hourly Hourly wage. Some jobs can be ‘under the table’

Usually not long term Not really legal, tax wise

Overtime can be given for hours worked over 40.

Time-and-a-half Extra Pay for working more than X hours in

a week or working on a holiday. Not standard, each company has diff.

policies.

Salary

A fixed amount based on a years work.

May have set hours to be there, but salaried employees often work extra hours beyond scheduled for no extra pay.

Commission

A percentage of the sales come back to you. Salesman (commision) Waiters/Servers (tips)

By the Job

AKA Piecework, AKA Contract Work Get paid a certain amount per job Could be a bid or estimate Most common with business

owners

SALARY PROS CONS

HOURLY PROS CONS

COMMISSION PROS CONS

CONTRACT / BY THE JOB PROS CONS