2016-11-23 00:00:00 Payroll English Learn how a small business owner can increase the accuracy of a budget by accounting for overtime payments for employees. https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2017/03/08214808/Man-driving-car-on-street-earning-overtime-pay-with-mobile-devices-mounted.jpg Accounting for Overtime Pay in the Budget

Accounting for Overtime Pay in the Budget

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A critical business tool is an accurate budget. One component of a budget for small businesses with employees is overtime pay, which is the premium paid for overtime hours worked in excess of the normal wage rate. In Canada, for most employees, overtime begins once a person works over 44 hours in a week, and is due at 1.5 times the employee’s hourly rate. Budgeting accurately for this takes time and trial and error.

Assume a business owner calculates the average employee rate to be $15 per hour, and the average number of hours worked per week to be 48. The overtime budget per employee per week would be:

($15 x 1.5 x (48 – 44)) = $22.50 x 4 = $90

With time and more data, this estimate can be honed to something more accurate.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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