Sarah pays people in three different ways, and each method changes the math inside her Payday Simulator. Hourly employees (including tipped workers) multiply hours by rate, then add tips before calculating taxes. Salaried employees convert annual pay into each paycheck and remove consistent deductions like benefits. Commission employees earn a base draw to keep cash steady, plus a percentage of sales that can spike or dip dramatically.

The basic rules never change: track the promise (gross pay), apply every deduction with the right percentage, and confirm that net pay is accurate before the money leaves the bank. Misplacing one formula can make Sarah miss payroll, so you will practice all three pay types side by side.

• Hourly + Tips: servers, baristas, ride-share drivers. Pay swings with hours and tip reports.
  • Base rate: dollars paid for each hour on the schedule.
  • Reported tips: customer money turned in so taxes stay accurate.
  • Withholding: tax money set aside before the worker is paid.
• Salaried: managers, salaried developers, operations leads. Amount per paycheck = salary ÷ pay periods.
  • Annualized pay: the yearly promise shown on offer letters.
  • Pay frequency: how many checks per year (bi-weekly, semi-monthly, etc.).
  • Pretax deduction: money for benefits removed before taxes hit.
• Commission + Draw: sales reps and brokers. Draw ensures steady cash while commissions depend on closed deals.
  • Draw: a fixed amount advanced so the rep can pay bills.
  • Commission rate: the percent of sales the rep keeps.
  • Variable compensation: earnings that change with performance.
• Universal Terms:
  • Gross pay: the full promise before any deductions.
  • Net pay: the cash the employee actually receives.