- What is a base salary?
- Who receives a base salary?
- Who is exempt from a base salary?
- How to calculate base salary
- Popular jobs with base salaries
People work for many reasons. The most common reason is to earn money so they can buy the things they need and want. But before you accept a job offer, it’s important to understand how you’ll receive payment for your services. Employees get paid in many ways, with the most common forms of payment being hourly or salary.
What is a base salary?
Base salary refers to the fixed amount of money an employee can expect to earn annually at a job. This amount does not include commission, benefits, bonuses or any additional forms of compensation. Most often, employees receive their salaries bi-weekly throughout the year over 26 paychecks.
Who receives a base salary?
According to the Fair Labor Standards Act (FLSA), employees are categorized as exempt or nonexempt. Exempt employees are defined as salaried employees who don’t get paid by the hour. A salaried employee receives a base salary.
Who is exempt from a base salary?
Hourly employees are exempt from a base salary because they get paid according to the hours they work. On the other hand, salaried employees get a fixed amount of money for work performed, no matter how many hours they work. Of course, they must be able to meet certain goals and objectives.
How to calculate base salary
If you’re currently employed and don’t know already know what your base salary is, you can follow these steps to calculate your annual salary:
1. First, decide whether you are a salaried employee
It helps to understand your employment status when calculating your base salary. When you were hired, you were probably told that you’d be paid a set salary or by the hour. You might reference your official job offer for the details of your pay, though it may not be accurate if you’ve recently received a raise or had other changes to your status. Contact your employer’s payroll department for verification.
2. Second, reference information in your pay stub
Look at your pay stub for the specifics of your gross (total) pay. Pay stubs show specific deductions that include federal, state and local taxes, plus social security and Medicare. Other common deductions include health insurance premiums, flexible spending accounts and contributions to retirement plans. Your gross pay is the amount you earn before deductions, which differs from the net (take-home) pay that appears on your paycheck (or your direct deposit) after deductions. If your employer uses an online payment platform, your pay stub is likely available in digital format. Reference your gross pay when determining salary.
3. Third, determine your pay schedule
Understand how often you get paid. Many businesses pay employees bi-weekly, though some pay weekly, monthly or semi-monthly.
Examples of pay schedules:
- Weekly paychecks typically come on Mondays or Fridays, resulting in 52 paychecks per year.
- Bi-weekly paychecks come every two weeks, most often on Friday, amounting to 26 paychecks per year.
- Semi-monthly pay periods produce 24 paychecks per year. This schedule pays typically on the 1st and 15th or 15th and 30th of the month.
- Monthly paychecks come at the end of the month, resulting in 12 paychecks per year.
If you’re still unsure, your company’s payroll department can confirm the payment schedule.
4. Fourth, factor in any overtime pay and bonuses
According to federal laws, employees who earn less than $47,476 per year are entitled to overtime pay. This means that when you work extra hours (beyond 40 a week), you’ll earn 1.5 times more than your usual rate.
Example of how to calculate overtime pay:
- A salaried employee makes $52,000 per year ($25 per hour). He works five extra hours one week, resulting in overtime pay. His gross pay for overtime would be 1.5 x $25 x 5 hours, resulting in an extra $187.50 that week.
You’ll want to keep track of your overtime hours, or request a tax statement from your employer to get an accurate picture of your annual salary.
5. Lastly, calculate your annual salary
Once you have a firm understanding of how to find information regarding your salary, you can calculate it. Refer to your pay stub and locate your total gross earnings, before deductions. Now multiply that amount by your number of paychecks each year.
Examples of how to calculate annual salary:
- Weekly. If your total gross salary is $800, your annual salary is $41,600 per year. The equation is $800 x 52 = $41,600.
- Bi-weekly. If your total gross salary is $1700, your annual salary is $44,200. The equation is $1,700 x 26 = $44,200.
- Semi-monthly. If your total gross salary is $1200, your annual salary is $28,800. The equation is $1,200 x 24 = $28,800.
- Monthly. If your total gross salary is $3400, your annual salary is $40,800 per year. The equation is $3,400 x 12 = $40,800.
Once you’ve determined your base salary, you’ll be able to make a more informed decision about your budget and ways that you can save money for the future. You may decide it’s time for a raise or other employment option.
Popular jobs with base salaries
Here are a few examples of common jobs with base salaries:
National Average Salary: $39,998 per year
Role and Responsibilities: Teachers help students learn concepts related to general education subjects. These include areas like science, math, English, world history and computer skills.
National Average Salary: $42,388 per year
Role and Responsibilities: Office Managers oversee a company’s office staff and help to keep things organized. They provide administrative support to CEOs and other executive members, often scheduling appointments and travel arrangements. They ensure a harmonious environment for all employees within the office.
National Average Salary: $52,021 per year
Role and Responsibilities: Plumbers perform a variety of tasks that involve water supply and repair. They work in residential and commercial buildings, and often traveling to different locations each day. They install and fix pipes, water heaters, toilets, bathtubs, dishwashers and other water-related appliances. They sometimes assist with septic systems.
National Average Salary: $55,174 per year
Role and Responsibilities: Accountants work in many business settings and ensure that financial documents, taxes and records are accurate. They often work as financial advisors to help people manage their bank accounts and budgets.
National Average Salary: $77,167 per year
Role and Responsibilities: Web Developers help clients and businesses create websites and applications with their knowledge of coding (and design). They test site features, plus identify and correct issues on webpages that help ensure positive user experience.