How annualized wages are calculated

This topic summarizes how Annualized wages are calculated.

The short answer to this question is – it's complicated. The long answer depends on whether there is more than a year's worth of Payroll Statistics records in the system.

•

If the Client has more than a year's worth of wages in the Payroll Statistics table, the Annualized wages are simply the sum of the Gross Payroll amounts from Payroll Statistics.

•

However, if the client has less than a year in Statistics, then annualized gross pay is calculated like this:

•

AnnualGrossPayroll = (360.00/DATEDIFF(d,FirstStatStart,MostRecentStatEnd))* ISNULL(PeriodGrossPayroll,0)

•

Roughly translated Annual gross pay = (360.0/ number of days between the first pay period start and most recent period end) * SUM(Gross payroll on statistics)

•

360/difference gives you what percentage daily of the year for which payroll has been submitted.

•

Multiplying this by the sum of the actual wages gives an estimated total of what wages should be at the end of the year.

•

The 30/360 method is a commonly accepted practice used in calculations that divide the year into periods, such as mortgage amortization schedules because it rounds more cleanly.

•

It works as well as 365 when estimating possible payroll and leaves less chance for trailing decimals