Here’s one thing to remember: people get jobs to get money. That’s how they can provide for their families. If you want to get loyalty and maximum productivity, pay them the right way.
After all, money is a great motivator. If you give proper compensation for your employees’ efforts, they feel satisfied.
That said, do you know how to pay an employee? Learn various methods of paying employees below.
Set Up Employee Payroll
First, you need to determine how often you’ll pay and how much for each of them. You should already have an idea of the amount before hiring an employee for a role.
After that, figure out how to pay an employee. Do you want to pay them by the hour or with a salary? You can choose to pay your employees weekly, bi-weekly, or monthly.
Make sure to factor in the deductibles. You need the W-4, income tax withholding form (if applicable), health insurance, and other benefit forms.
Choose a Payment Method
For this step, consider what’s convenient for both the business and your employees. You can still pay them with a paycheck, but the recent years made it less popular.
Today, around 93% of Americans get their pay through a direct deposit while only around 5% receive a paper paycheck. Direct deposit is more preferrable for both parties because it’s automatic and instant.
Explore other ways to pay your employees. You can also pay with payroll cards or even cash.
Calculate The Employee Pay
Calculate their gross pay based on their payment structure. If you pay hourly, multiply their hours worked for that pay period by their hourly wage. Make sure to account for any overtime and time off.
If they’re salaried, the pay should be consistent with each pay period. For commission-based employees, calculate their base pay before adding their commission earnings. The answer becomes your employee’s gross pay.
Next, calculate their net pay by subtracting the amount to withhold from the gross pay. Subtract federal income taxes, state income taxes, local taxes, healthcare benefits, retirement savings plans, and other applicable deductions.
What you end up with after this is the amount to pay for that pay period. If you distribute a paycheck stub, include these details. It prevents future disputes in case your employee feels dissatisfied.
It can be time-consuming and there’s room for many mistakes. You can automate this process using a payroll calculator and a check stub maker.
Learn How to Pay an Employee the Right Way
Now that you’ve learned how to pay an employee, pay them on time with their deserved compensation. Afterward, don’t forget to do some post-payroll tasks. These include depositing taxes, filing forms, and maintaining records.
Paying employees isn’t an easy task, but you must do it the right way. If you want to learn more, feel free to visit our website today.