What Is Net Pay And Gross Pay?


Pay attention to what is net pay and gross pay, because you need to be clear about them. Net pay means your gross pay minus your net income. Gross pay is what you make after expenses. Net pay is the amount of money you earn before expenses. There are a few differences between net pay and gross pay, so you have to learn both if you want to be an employer or not.

Employers do not pay for your net pay and gross pay right away. If you are still employed, your employer may deduct this amount from your gross pay, quarterly unless your employing company has a policy that says otherwise. This amount is usually tax-free, though in some cases it may be subjected to federal and state taxes. You do have to report this amount on your income taxes when filing your personal taxes.

Some employees on a temporary basis might get a refund check in the form of net pay and gross pay. Temporary employees who make less than a certain amount of hours over a period of time are subject to earning under a weekly benefit. This benefit is usually paid on a bi-weekly basis. This is one way the employees’ earnings are counted toward meeting company requirements. If you are an employee of a company that has such a policy, you can count your earnings toward meeting payroll requirements.

The definition of net income covers all sources of income other than your gross pay. This includes bonuses and incentives, tips, profits and dividends, and some other unearned incomes. These include your rental income, alimony, and any other income you receive besides what are your net pay and gross pay. All types of incomes are included, even if they are small.

The net profit or loss for your business is the difference between your gross pay and net pay. Most businesses calculate this as net profit divided by net income. The net profit for you, though, is only a percentage of your gross profit. Your gross profit is the total amount of money your business earns from goods sold or services rendered. If the cost of goods sold or services rendered is greater than the total amount of money your business earns from your sales, then your profit will be negative.

Net profit and gross profit are the only two figures included in a company’s statement of accounts at the end of the year. The gross profit figure is what you see on your last statement of accounts, your annual financial form that helps your tax situation. The net profit figure is the statement of accounts that shows your net earnings less your expenses. Net earnings refers to the income that goes into your pocket after expenses are deducted.

What is net pay and what is gross pay for you as a retailer will depend upon how you calculate it. Many retailers choose to include the net profit in their payables. They compare their net income to their gross income and come up with a number that is lower than their gross pay. Other retailers, though, choose to exclude the gross pay from their payables, calculating what is net pay and gross pay separately.

You may want to compare what is net pay and gross pay next time you are comparing your net profit to your gross profit. You will be able to see the difference more clearly when you have all the information at your finger tips. Knowing what is net pay and gross pay will give you the advantage you need to succeed in the retail industry.