Lesson ProgressPhase 6 of 6
Phase 6Closing
Closing: Deductions and Net Pay
Reflection and preview of payroll timing and liabilities
Wrap-Up: From Gross to Net to Total Cost
Today you learned the complete picture of what payroll really costs: what employees take home (net pay) and what employers actually pay (total cost). Sarah can now answer both questions.
What You Learned Today
- Gross pay minus all deductions equals net pay (take-home)
- Employee deductions: federal tax, Social Security (6.2%), Medicare (1.45%), state tax
- Employer matches Social Security (6.2%) and Medicare (1.45%) on top of gross
- Employer total cost is approximately gross × 1.0765
- Pre-tax 401k contributions reduce taxable income
- Tipped employees must report tips as taxable gross
Connection to the Cash-Crunch Story
Here's why today's lesson matters for TechStart's cash crunch:
- Budgeting: Sarah must budget for employer cost, not just gross wages
- Cash timing: Deductions are collected from employees but paid to the government on different schedules
- Decision-making: A $50k salary actually costs ~$53,800 - that matters for hiring decisions
- Compliance: Missing FICA matches or withholding can result in penalties
Preview: Lesson 4 - Payroll Timing and Liabilities
Next lesson tackles the timing problem:
- When does the employer actually pay the taxes to the government?
- Why might the bank balance disagree with the payroll register?
- What happens if Sarah misses a tax deposit deadline?
- How do paycheck dates affect cash flow timing?
Unit 5 Lesson 3: Deductions and Net Pay
Reflect on your learning journey and growth in the CAP framework
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🦁COURAGE
Describe a moment when you felt unsure about which deduction to apply first or how to handle a specific situation. What did you do to work through it?
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🌊ADAPTABILITY
How did you explain to someone why employer cost is higher than gross pay? How would you help a new business owner understand this?
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⚡PERSISTENCE
What was most challenging about calculating net pay for different employee types (hourly vs. salary vs. tipped)? How did you keep going when the numbers got complex?
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Progress: 0/3 reflections completed
Take-It-Forward Challenge
Before next class, calculate your own (hypothetical) budget: If you earned $25/hour and worked 40 hours per week, what would your bi-weekly gross be? Then calculate your estimated net pay after typical deductions. Bring your numbers to class.