Are you a new business owner who has lately stepped into the world of entrepreneurship? If yes, one of the trickiest jobs to learn is how to pay your employees. If you thought you’ll just hand them a bundle of cash after withdrawing it from your bank account. Now that you’re an entrepreneur, you are legally bound to document every single penny that you pay and earn. Here International Payroll Outsourcing services can be definitely helpful for your business in order to streamline the process and avoid headaches.
This process is not as intimidating as it may seem. While you may certainly hire a wage and hour attorney for a simpler solution, you should also be aware of the types of wages you have to cater to. Keep reading to know more on this.
Compensation and their types
The three main ways in which small businesses pay their employees are as follows:
- Fixed yearly salary
- Hourly wages
- Commission
SALARIED EMPLOYEE
Salaried employees of a small business organization are paid every month at a fixed yearly rate. These employees receive a fixed amount on each payday and the amount is determined by dividing the yearly salary by the total number of pay periods. Salaried employees are the best for higher-level corporate jobs. Such employees usually don’t receive overtime pay.
HOURLY EMPLOYEE
Hourly wages are based on an hourly rate and here the pay of the employee is determined by the total amount of time they work during that period. The entrepreneur can pay $20 per hour and in case they work 80 hours during that time period, they owe $1600. These hourly wages are apt for someone who is not hired on a continuous schedule, like a server at a restaurant.
COMMISSIONED EMPLOYEES
There are certain business structures where employees are paid on the basis of commission. Through this kind of payment, they earn a low rate on an average, which can either be salaried or hourly, and additional pay based on sales goals. Commission-based pay is appropriate for sales roles and it gives incentives to employees who are able to meet their pre-set objectives.
Supplemental wages for small business employees
When we say supplemental wages, we mean the non-regular, additional wages that are received by the employees. Here is a list of these types of wages:
OVERTIME
As per the FLSA or the Fair Labor Standards Act, non-exempt employees should receive overtime wages if they work for more than 40 hours in an entire workweek. 1.5 times the regular hourly wage of the employee is supposed to be the overtime pay.
BONUS PAY
You may have to pay employees their bonus payments which are more like rewards or gifts that are given in order to appreciate the efforts and success of an employee.
TIP WAGES
Tips are additional wages that are often given on top of the regular wages. Employees should inform all tip income to the employer if they earn more than 20 dollars in a month.
In case you face wage issues with your employees or they file a charge against you for not receiving the correct wage, you should hire a wage and hour attorney for more assistance.