- October 19, 2018
- by Kate Borucka
- No comments
A paycheck calculator is a useful tool that can help to calculate employee’s payroll check. Because calculating payroll can be tricky. You need to incorporate all the costs, including federal taxes, state taxes, and all other expenses that you can find on the W-2 form. Also, you need to remember about all other paycheck details to comply with the state or federal rules.
So if you’re not good with numbers and need a free payroll calculator, make sure to check out our short guide on paychecks and payroll!
In this article you’ll learn:
- What are all the costs of an hourly employee to include in the paycheck
- What to consider when calculating payroll
- The best free paycheck calculator to help you
Table of Contents
The Real Costs of An Hourly Employee
Payroll management may not be easy. Especially, if you hire many people on different contracts or if you own a small business and don’t have the HR and accounting department to take care of payroll issues.
When calculating payroll for an employee, you need to think about many elements—gross wage, yearly or hourly setup, and all employee-related expenses such as payroll taxes, and overhead costs.
👉 Learn more about the employee cost.
While there’s no problem with determining the actual net hourly rate of an employee, there is a number of additional and obligatory costs you need to include. Barbara Weltman writes in her article about a rule of thumb, “the cost is typically 1.25 to 1.4 times the salary, depending on certain variables. So, if you pay someone a salary of $35,000, your actual costs likely will range from $43,750 to $49,000.”
She also describes all the mandatory costs that you need to incur when hiring an employee:
- Social security, Medicare taxes—the social security tax rate may change each year so it’s best to check it regularly.
- Federal unemployment tax (FUTA). The FUTA tax rate is 6%, but most employers can take a FUTA credit of 5.4%, resulting in 0.6%.
- State unemployment tax, which varies across states and claims experience (the more claims made by former employees for unemployment benefits, the higher your state unemployment tax rate).
- Insurance coverage, which may vary with different states, depend on the type of business, number of employees, and other factors.
⇒ For more specific information on tax calculations, you can see the IRS Employer’s Tax Guide.
What’s more, when you hire employees, you also have to take into account payroll withholdings. These are specific amounts that an employer needs to withhold from employee gross wage for taxes.
Payroll withholdings include such taxes as state disability withholding, state withholding, federal withholding, SUI payroll state taxes, and other federal deductions and state taxes.
To know more about all federal taxes and comply with payroll tax updates, make sure to check W-2 and W-3 forms.
What Is The Best Payroll Calculator App?
The best way to calculate the real costs an employee is to use an accurate payroll calculator. It is a free and effective tool that can make your work easy, especially if you hire many workers or some people work on different terms. Or if you work as an accountant and need to keep track of all the numbers.
To help you make the right calculations, we’ve prepared a short list of the most helpful tools. Instead of using a paid paycheck calculator app, you can use free solutions. Take a look at the top 6 free payroll calculators and choose the one that you like the most:
To get detailed, accurate calculations and be able to predict future payroll, expenses, and monitor billable hours, you might want to consider using something more than just a free paycheck calculator. How about time tracking software?
TimeCamp is a free time tracker that helps to improve payroll processes. It makes all the calculations for you, stores all the information about hourly wage, yearly salary, how much money is spent on paycheck work and all projects in the company.
And before you say “no!” take a look at the benefits you will gain from implementing such a tool in your organization:
- TimeCamp is a free time tracker for unlimited users
- The app allows you to gather all the data about your budget, net income, different pay periods, or extra income
- You can control the budget when it’s exceeded—you always see who is exceeding the budget and prevent any financial problems
- Turn time entries into invoices based on estimated hourly rates
- No more manual timesheet filling—it’s a fantastic solution if your staff has to log their work hours. That means precise payroll management thanks to detailed timesheets
- Reports help in tax calculations with precise information on employees’ work
- Integrations with the most popular accounting and project management software
- You can use it as an advanced hour calculator instead of manual time cards
Start tracking time and budgets with TimeCamp
Payroll Guru app is a mobile app that helps to calculate employee’s payroll check. It always has updated payroll tax calculations for each year.
The Payroll Gurus created paycheck calculator to easily calculate net paycheck, net pay, and all those inputs that are necessary to determine payroll.
The precise Payroll Guru app allows for an unlimited number of profiles so you can add customized deductions for employees who are similarly taxed. It’s a good alternative to a paid paycheck calculator app. You can store and edit all the information about employees, including state, pay period, allowances, and deductions.
The app has up to 8 pre-tax and after-tax deductions. It has every previous calculation saved and additionally, can display calculated paycheck as a paycheck distribution pie chart.
There are also a few extra variables related to taxes: federal withholding, social security, medicare, state withholding, State Unemployment (where applicable), and State Disability Insurance (where applicable).
It’s a good hourly wage calculator app as well as a salary calculator app for deducting federal taxes.
QuickBooks offers a free payroll calculator that is a very simple solution on a single page layout. It allows you to calculate paychecks for your hourly and salary employees. It has four parts—taxes, overtime, and commissions: pay information, additional pay, Federal Tax Information, and State Tax Information DE 4.
All these inputs are calculated for you with taxes automatically deducted. You can easily determine net pay and federal taxes.
There are no extra inputs so the tool is best suitable for basic use.
☞ Check Timecamp & QuickBooks integration to track time for payroll directly in QuickBooks and automate payroll process.
If you’re looking for the simplest solution, this will be the perfect fit. It is a neat payroll manager that helps to determine precise rates and costs for US workers. It’s important that you can choose the state as state income taxes vary greatly among different states.
It explains all the important information you should know to calculate net paycheck, payroll tax, and whole income. It’s an easy-to-use, intuitive, and transparent solution
This free paycheck manager allows you to calculate various costs. PaycheckCITY is a simple paycheck calculator that lets you determine different costs thanks to many calculators: Salary Calculator, Hourly Calculator, W4 Calculator, Gross-Up Calculator, Bonus Pay Percent, Bonus Pay Aggregate, 401(k) Calculator, Dual Scenario Salary, Dual Scenario Hourly.
It’s a non-paid app that lets you calculate net paycheck for a certain date. It includes a few formulas that automatically determine income completely for free.
ADP is an online paycheck manager to calculate payroll taxes, manage employee taxes, and facilitate entire payroll processing. It offers different free online payroll calculators. You can check personal salary, retirement, savings for extra money, and investment decisions. Additionally, you can choose from Retirement Calculators & Tools, Salary Calculators, and Paycard Savings Calculator.
The app helps you to do your payroll taxes, and accurately calculate numbers for payroll and paychecks. ADP can help to stay compliant with the state tax, W-2, and make sure all paychecks are done properly.
Calculating an hourly rate and other related expenses is important to give your workers a fair paycheck and make sure you’re paying all the taxes accordingly. And the right tool can be your personal paycheck manager calculator. Hiring accountants to do the job? Help them process payroll with automatic software.
If you’re not sure about the paycheck calculator, you may consider taking legal tax advice or hire a payroll specialist to help you calculate exact payroll amounts and handle payroll-related issues.
Happy payroll processing!