Financial Glossary

Annual salary is the total amount an employee is paid per year for their work, typically divided into regular pay periods.

Benefits are non-wage compensation provided to employees in addition to their regular salary, including health insurance, retirement plans, and paid time off.

A bonus is additional compensation beyond an employee's base salary, typically awarded for performance, company profitability, or special achievements.

Contract work is temporary employment for a specific project or period, typically without the benefits or job security of permanent positions.

A cost of living adjustment is an increase in wages or benefits to offset the effects of inflation and maintain purchasing power.

Commission is a payment based on a percentage of sales or transactions, commonly used in sales roles to incentivize performance.

Freelancing is a type of self-employment where individuals offer services to clients on a project or contract basis rather than being permanently employed by one company.

Gross salary is the total amount an employee earns before any deductions such as taxes, insurance, or retirement contributions.

An hourly rate is the amount of money paid per hour of work, commonly used for part-time, temporary, and freelance positions.

Hourly wage is the rate of pay per hour of work, used for non-exempt employees who are entitled to overtime pay.

An independent contractor is a self-employed individual who provides services to clients under a contract but is not considered an employee for tax or legal purposes.

Net income is the amount of money remaining after all deductions have been subtracted from gross income, including taxes, benefits, and other withholdings.

Overtime pay is additional compensation for hours worked beyond the standard 40-hour workweek, typically at 1.5 times the regular hourly rate.

Payroll deductions are amounts withheld from an employee's gross pay by the employer for taxes, insurance premiums, retirement contributions, and other mandatory or voluntary purposes.

A salary is a fixed regular payment, typically paid monthly or biweekly, expressed as an annual sum rather than an hourly rate.

Severance pay is compensation provided by an employer to an employee who is laid off or terminated, typically based on length of service.

Self-employment tax is the Social Security and Medicare taxes paid by self-employed individuals, covering both the employee and employer portions.

A wage is a fixed regular payment for work, typically calculated on an hourly, daily, or piecework basis rather than an annual salary.

Withholding tax is the portion of an employee's wages that an employer sends directly to the government as a prepayment of the employee's income tax liability.

A W-2 employee is a worker employed by a company who receives a W-2 tax form reporting wages, tips, and taxes withheld during the year.