Several key components are involved in payroll calculation:
Gross Pay: The total earnings of an employee before any deductions. This includes hourly wages or salary, bonuses, and other types of compensation. Withholdings: These are amounts deducted from the gross pay for federal and state taxes, Social Security, Medicare, and other purposes such as retirement contributions or health insurance premiums. Net Pay: The amount an employee receives after all withholdings are deducted from the gross pay.