Gross Salary

Gross Salary Undoubtedly, the business world is one of the most complicated because there are many definitions that we are forced to learn in order to not have any problem in the future. So, if you have a company or want to work for one, you should take into account various aspects and concepts that are very important. One of these aspects is to know differentiating between gross and net salary. From my own experience I can say that if you do not know the difference between these two basic concepts, you may have many problems at the moment to be hired or hiring a new employee. At this point, you should already know that salary is any compensation that an employer pays to an individual for any service. But, do you know to differentiate between gross and net salary? If not, here you will learn everything about these important concepts.

We will explain the concept of Gross salary through an example. Let's suppose that you are working for a company, in which your salary is $ 24000 which will be paid in 12 parts, then your salary will be $ 2000 per month. Let's assume that the amount you have to pay as concepts of deductions and contributions is: $ 540, therefore:

  • The gross salary you will perceive for one year will be: $ 24000
  • The gross salary you will perceive for one month will be: $ 2000.
  • The net salary you will perceive for one year is: $ 24000 – 12 ( $ 540 ) = $ 17520
  • The net salary you will perceive for one month $ 2000 - $ 540= $1460.
As we can see, the gross and the net salary are two completely different things.

Therefore and as we saw before, Gross Salary is the total money we receive for the work we perform before deductions and contributions that are run on each payroll. Meanwhile, Net Pay will be called to the salary received by the worker after the deductions and contributions, that is, the money that workers actually receive in their hand or deposited in an account, therefore the gross salary is always greater than the net.

A common mistake in differentiating between the net salary (that is actually received by the worker) and the gross salary (the total pay without deductions) can be fatal in a labor negotiation. That is the reason why you have to be clear about both concepts and know exactly the contract you will hire. Usually, contracts are made on gross salary base. If you are one of those who do not like calculations, remember that there are a large number of useful tools and programs that will help you to calculate automatically your net salary. This is the best way to avoid mistakes and always know how much you will earn in your job.

If you want to work in another country, it is important to remember that each country has its own taxes rules, keep it in mind!