How to Calculate Net Monthly Income

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Deductions from gross income
Deductions from gross income (Image: Calculating payments image by Christopher Meder from Fotolia.com)

If you are an employee, your monthly net income is your take-home pay for the month, after deductions have been withheld. If you are a business, your monthly net income is your monthly earnings or profit. The calculations for both situations vary.

Things You'll Need

  • Pay stub
  • Cash flow statement

Employee Monthly Net

Figure your hours worked for the year. The calendar year has 2,080 hours. To determine your hours for the month, calculate as follows: 2,080 / 12 = 173.33 hours.

Figure monthly gross pay based on your salary. For instance, say your annual salary is $50,000. Calculate your gross monthly pay as follows: $50,000 / 12 pay periods = $4,166.67. Verify your gross monthly income by using a semi-monthly payroll, which occurs twice per month: $50,000 / 24 pay periods = $2,083.33 x 2 = $4,166.67.

Subtract monthly deductions from your gross monthly pay. This includes federal, state and FICA taxes, plus involuntary deductions such as health and retirement benefits. The result is your net monthly income.

Business Monthly Net

Determine the company’s monthly revenue--how much money it made for the month.

Subtract sales costs and all other expenses for the month to arrive at the before-tax amount. Check your cash flow statement for the total monthly revenue. Your cash flow statement should show all cash and cash equivalents coming into and exiting the business.

Subtract taxes to arrive at your monthly net income. For instance, say your gross monthly earnings amounted to $30,000. Your expenses were $10,000 and you paid $5,000 in income taxes--your net monthly income is $15,000.

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