Net Salary

Net Salary According to the definition wage is the payment that a person receives regularly, it can be every month or fortnight, from their employer as a result of the provision of a productive activity. While it is true that there are different types of salary, we must take into account two, that often are considered as the most important. These salaries are, of course, the Net salary and the Gross salary.

Usually, before starting to work in a company, there is a salary negotiation in which the employer and the employee talks about a salary. To avoid surprises at the time of receiving our salary, it is advisable to have clear about what parts make up the salary. And is that something as common as negotiating a new salary can vary greatly depending on whether we refer to gross or net amount.

Generally, we as workers enter into any given wage, but when we receive our first payroll, comes the surprises and we realize that the salary is much lower than we were thinking. No matter how surreal this situation may seem because this is a fact that is repeated quite often in the business. The reasons are several, but the main lies in the logical ignorance on the part of society of not understanding the terms in which contracts are signed. One of the most common mistakes in this sense goes through confusing gross and net salary, two of the basic concept that every employee must have present in order to know their exactly salary situation.

Net salary is, ultimately, what the worker actually receives, that is, the money we have after deducting taxes and social security. Meanwhile, the gross salary is, in simplified terms, the total before these deductions and contributions. Through this practical example, you will better notice about the next wage. Let us assume that you work for a very important company, and in your salary is $ 4800, but the deductions and contributions you have to pay for social security and taxes includes a total of $ 800, therefore:

  • The gross salary is: $ 4800
  • The net salary is: Gross salary – (Deductions + contributions) = $ 4800 – $ 800= $ 4200
As you can see, the gross and net salaries are two completely different things that we can calculate in an easy way. You should know about this terms because it will help you through your work life, and eventually, if you become the propriety of your own company. In the business field is necessary to learn more about financial terms and know about salaries is a key factor in order to manage personnel of your own.

It is also important to remember do not to talk to anybody about your net salary because this can bring some problems. You should also ask to your employer about what kind of deductions and contributions you have to pay, remember also that if you want to work in another country, each country has its own tax rules.