On step 3 of the Contractor new hire flow there is a question on First payment amount.

This question will appear for

1) Fixed contractors; AND

2) Starting date is not the 1st of the month

This question is asking how you want to prorate the first month's payment. There are a number of different ways to prorate, two common ways include:

1) Daily rate

There are ~260 working days in the year. Take total annual pay divided by 260 for a daily rate. Multiply the daily rate against the number of working days during that pay period.

Contractor is starting work June 14th 2021. We need to calculate the first payment amount for the period June 14th - June 30th.

Contractor is paid

-$5,000 fixed pay per month which is $60,000 per year

-$60,000/260 = $230.7692 daily rate

The contractor is working 13 days from June 14th - June 30th

First payment amount is $3,000 (daily rate times the number of working days $230.7692*13)

2) Working days in pay period

Count the total number of working days in the month and count the number of days the contractors will be working. Divide the number of days the contractors will be working against the total number of working days then times the pay per period to get the first payment amount.

There are 22 working days in June 2021. The contractor is going to work 13 days from June 14th to June 30th.

First payment amount is $2,954 (days worked divided by total working days times the monthly pay 13/22*5000)