How to Calculate Your Hourly Rate & Factor in Taxes

Usually, unhow to calculate overtime pay breaks are shown as clocking in and out twice throughout the day, which you must add to the timetable records. For example, an employee takes unpaid time from 1pm to 2pm. One of the most common aspects that may confuse people when calculating worked hours is the am and pm distinction. Therefore, we recommend using military time or the 24-hour clock to ease the subtraction process. You can choose to calculate on the basis of the exact hours worked, but you need to make sure that your time tracking solution allows it. Reply from OTC – Hi Eric, Thanks for reaching out to us.

• Overtime in Virginia may be applied to employees who would otherwise be exempt under federal law.
• Check your software to see if it expects the input of hours and minutes or hours with minutes converted to a decimal.
• Your employee works 52 hours in a particularly busy production week.
• The resulting number is the average number of hours you work per week.
• Take, for example, a salaried employee who is paid $500 in salary for a 50-hour workweek and works a 50-hour week.
• If your team is using Wrapbook, you can always adjust this if ever inputted incorrectly.

In addition, we’ll discuss ways to track overtime hours. You will also need to withhold and remit federal, state, and local income taxes, as well as social security and Medicare, to get the final payment that an employee will receive. For every business, accurate accounting of employees’ hours is essential. You need to be precise, as potential mistakes can turn into a serious problem and can even lead to lawsuits. At the same time, you also want to prevent your employees from committing time theft and protect your company. A more convenient option for tracking hours worked is time clock software. OnTheClock, you get several features your business can benefit from.

Calculating time and a half pay for hourly workers

Your gross pay is the amount you get paid before taxes, benefits, and other deductions. Then multiply your gross pay by the number of pay periods in a calendar year. For example, let’s say your gross pay is $1500 and you get paid biweekly . Our calculator can assist you with working this figure out. Convert your annual salary, monthly wage or weekly pay to an hourly rate and find out what you’re earning per hour. If an employee has logged 8 hours and 20 minutes, you need to divide 20 minutes by 60. This is the number that you can use in the next step, where you multiply by the wage rate.

And if you aren’t properly tracking the hours employees work, time wreaks havoc on your bottom line. How do you make sure you’re doing it the right way, paying your employees the right wage, and protecting your net income from errors? Consider this your bite-sized guide to calculating hours worked. So, whether you want to give an Excel timecard calculator a try or have a payroll company handle the calculations for you, you have plenty of options. Overtime in Virginia may be applied to employees who would otherwise be exempt under federal law. Further, there are harsher penalties for those who do not pay overtime correctly. Total your weekly timecard hours in decimal format for payroll.

Employee Pay & Overtime Regulations

Therefore, many businesses prefer using payroll solutions to count employee working hours and paychecks. These services usually include calculating time spent for work, gross wages, overtime compensation, and tax deduction. However, this method is prone to time theft as it’s difficult to ensure the accuracy of the reported working hours and minutes. Furthermore, it can reduce productivity since you or another team member must check these documents manually and calculate the employee hours worked. Besides making payroll easier for you, a time tracking and payroll solution builds trust and transparency for your team. Calculating logged hours can be a contentious issue, so when the process is automated and clear then employees have no reason to doubt your approach. 2.Use rounded hours, which entails that you set up your method for timesheet rounding.

Once you figure out how to calculate how many hours you work, you’ll then want to convert that to decimal form. That will ensure that it multiplies correctly with your hourly rate. Sure, it may be easier to note this as a one-hour break, but you will likely have to get more specific than that. Keep in mind, production companies and some freelance positions might require stricter accounting.

How to calculate your hourly rate

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Restaurant payroll is one of the largest expenses your business will have to abs… If they make $455 per week, $455 divided by 40 equals $11.37. Highly paid employees who make at least $107,432 per year. Add $720 and $135, which equals $855 — the amount you owe them for all hours worked.

Independent contractors do not qualify for overtime pay. Salaried employees are typically exempt from overtime if their weekly income is over a specific amount.