What is a pay stub: What Is A Pay Stub & What Should It Include?

What is a pay stub

Colorado state law, for example, requires that employees receive paystubs from their employers at least once a month, which must list gross and net wages, as well as all deductions. A pay statement is a document that summarizes an employee’s gross pay, taxes and deductions, and net pay. It can be provided in printed format with a paycheck or made available electronically. In some states, employees must consent to receive electronic pay statements. They can also help employees with proof of income when needed, like for a car loan or to lease an apartment.

When you pay your employees each pay period, you’re compensating them for the time they worked, whether they’re exempt or hourly employees. Create a pay stub for your employees in no time with this easy-to-use template. This guide is intended to be used as a starting point in analyzing an employer’s payroll obligations and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services. In small or medium-sized businesses many depend on the human resource department or the accounting team to get things done.

In the days before digital banking, employees would cash a paper paycheck that was tied to a paper “stub” detailing the breakdown of hours worked, earnings, deductions, and taxes. In order for the company or the individual to properly file their tax return documents for the year and determine the taxes paid, they need to have the required documents in place. An employee paystub is also referred to as a pay stub, payslip, earnings statement, or paycheck stub. Creating paycheck stub forms for your business can now be streamlined and the best part is that you can generate a pay stub online in minutes.

By doing so, they can verify the accuracy of their annual Form W-2, Wage and Tax Statement when preparing their individual income tax returns. Employers usually provide pay statements because it’s required by a state or local jurisdiction. Employees who receive printed paychecks generally find their pay statement attached to the check. It also may be referred to as a paycheck stub, wage statement or pay slip. You can get the full guide to pay stub deduction codes so you can decipher an employee paystub in minutes.

How you calculate the employee’s gross wages depends on if they are hourly or salaried. For hourly workers, multiply the employee’s hourly pay rate by the number of hours worked in the pay period. To find a salaried worker’s gross pay, divide their annual salary by the number of pay periods in the year. The information contained within a pay statement is subject to federal and state employment recordkeeping laws.

  • You need to watch out because not all online check stub maker programs or pay stubs companies are legitimate.
  • Some other useful use cases of pay stubs to be used as proof of income are as follows.
  • Also in the unlikely event that the employee comes back with the argument that they were not paid or suspect inaccurate net payment.
  • The earnings section shows your earnings from the pay period and includes overtime.
  • These mandates pose potential complications for businesses with employees in multiple states, since each one has its own set of rules.
  • But manually tracking all the information you need to include on pay stubs is a time-consuming hassle.

Be sure to fill in our contact form if you have any questions or if you or your company get stuck with any technical issues. If your company needs to verify a certain new employer’s work history you can resort to contacting the previous employer. The Pay Stubs was so easy to use and takes the guesswork out of your calculations. List each contribution on its own line with current and year-to-date totals. Find out more about international payroll, and HR and payroll in the US.

Paystubs can be photoshopped and falsified by a disgruntled employee or worse yet, generated by software that has wrong calculations. Using our paystub generator puts your company right on top with the elites as not all paystub maker platforms are the same. With a small fee, you can create a paystub and get on with your business with no further delays. Entrepreneurs, contractors, and freelancers all need to have their proof of income or paycheck stub on hand. Since this category does not usually make a steady income, it’s best to have a document to record their earnings, deductions as well as the amount they need to pay come tax time. Here, we are referring to the net pay, not the gross pay that is, the amount the employee takes home in a given pay period.

How Does Our Check Stub Maker Work?

Using a check stub maker or a paystub generator to create pay stubs online is the revolutionary new way for your company to create pay stub forms. It takes a few minutes to select a pay stub template, insert the employee information and your legitimate check stub maker platform creates a pay stub for you. Using a paystub creator helps ensure correct calculations and guarantee that you or your employee have proof of income on the go.

  • If you’re using a payroll app—like Hourly—employee information would be easily accessible elsewhere for the worker to view and amend if needed.
  • If an employee has any nontaxable income, you must also include it under gross wages.
  • Be sure to check that the information on your last pay stub of the year matches the information on your W-2 form, which details your wages and taxes paid for the year.
  • Filling in the information, printing them and sending them out to the concerned individuals.
  • Simply put, a pay stub is a paper we keep after cashing our payroll checks.

For example, some businesses may list health insurance as HS while others may call it HI. Unions, savings funds, pensions, organizations and companies all have their own codes too, any of which could appear on your paycheck, depending on your circumstances. Any errors in your deductions are your responsibility to report. The last thing you want is for an error to be repeated through several pay periods. If you have questions about any of the information listed on your pay stub, be sure to contact your payroll provider. Pay stubs give your employees key insights into their gross pay—and what deductions are being taken out of their checks each pay period.

Before you take that leap, be mindful of the legal troubles that you need to avoid with electronic paystubs. There are many abbreviation codes found on a payroll stub that are not easy to comprehend on your own. The company may not have exact guidelines on how to decode a pay stub document. Understanding a paycheck stub is a way to double check your work, if you’ve done the calculations correctly or if something is missing. Understanding information on a pay stub can help solve issues for you and your business.

What do you do if you lose your pay stub?

Since not all salaried workers receive pay stubs from their employees, perhaps it’s best to browse through the options below. Choose the option that best suits you and your company or you could always opt for using a paystub creator. Our pay stub generator, unlike any other online paystub maker, is hassle free and takes less than 2 minutes to complete.

What is a pay stub

The least you could have are accurate pay stubs to have, save, and understand. Payroll taxes and other deductions (we’ll get to those later) reduce the employee’s earnings. The pay stub itemizes taxes so that employees can see all the tax amounts withheld from their gross pay. If you have hourly workers, their gross wages are calculated by multiplying their hourly rate by the number of hours worked in any given pay period.

What Is The Difference Between Real And Fake Pay Stubs?

When using a paid or free payroll tool, you’ll enter in the required information in each area of the pay stub. Remember that the withholding amounts for taxes must be paid to the correct agency, and these numbers should be double-checked to avoid errors that might cost you penalties. We all know that tax filing time can be stressful to both employers and employees. The endless paperwork and data verification can be overwhelming.

If an employee has any nontaxable income, you must also include it under gross wages. Below, you will find some of the most common deduction codes that appear on your pay stub. But manually tracking all the information you need to include on pay stubs is a time-consuming hassle. With Hourly, there’s no need to worry about keeping track of employee hours or deductions. Our app automatically tracks wages, hours, and deductions, allowing you to issue accurate, up-to-date pay stubs with a few simple clicks. Your employee’s gross wages (sometimes referred to as gross income) are their pre-tax wages.

What is a pay stub

As SMEs struggle to survive and grow, the paystub generator can help by offering a paystub portal that is tailored to suit their needs. With the check stub maker, you can send your employees their paycheck stubs while both keeping digital copies. Since you have the ability to create pay stubs online, you can efficiently use your time wiser. Find out more about why a paystub portal is a growing business’ best friend.

After subtracting taxes and deductions, you have the employee’s take-home pay. A health savings account is another way to put pre-tax dollars aside in a special account for medical expenses. To be eligible for a health savings account, you’ll need to select a high-deductible health insurance plan. Contributions to a health savings account are deducted from your pre-tax income.

Employee information and restricted files are at risk of being stolen or destroyed if not well kept. Always make it a habit to safeguard company information and important documents. Employers need to keep some form a record that their employees have been paid and how much. Also in the unlikely event that the employee comes back with the argument that they were not paid or suspect inaccurate net payment. It’s always best practice to keep transactional business records. Employees will need their paystub documents for various reasons.

Pay stub documents are very useful in certain situations especially during tax time. Both the employer as well as employees will require pay stub documents in the career time. By reviewing their pay stubs, employees can make sure they were paid correctly and understand their deductions. The payroll deductions on a pay stub vary depending on the small business employee benefits you provide.

Take fewer allowances, and a bigger chunk of your income will be withheld for your federal taxes. Just like gross wages, information on deductions should be included for both the individual pay period and year-to-date. Some other useful use cases of pay stubs to be used as proof of income are as follows.