Financial Management & Digital Accounting · Beginner level

Beginner level · Module 2: Payroll and Budget Preparation · Lesson 1 of 3

Payroll Basics

Calculate gross pay, deductions and net pay for each employee.

In this lesson you will

  • Calculate gross and net pay
  • Apply deductions from official tables

Key concepts

gross paydeductionsnet paypayslip

The lesson

Gross pay is the total earned: basic salary plus allowances and overtime. Deductions include income tax, pension or social security contributions where they apply, and agreed advances.

Net pay = gross pay − deductions. Use the current official tax and contribution tables; never copy rates from an old sheet.

Give each employee a payslip showing gross pay, each deduction and net pay.

Step by step

  1. List each employee's salary and allowances.
  2. Calculate gross pay.
  3. Apply deductions from the provided tables.
  4. Calculate net pay and prepare payslips.

Practice activity

Prepare the payroll sheet for five staff.

Expected result: A payroll sheet with correct totals and payslips.

Check your understanding

  1. How is net pay calculated?

    Show answer

    Gross pay − deductions.

  2. Where should tax rates come from?

    Show answer

    The current official tables from the tax authority.

Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.