Pay Stub

What Is a Pay Stub and What Do You Put on It?

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The Fair Labor Standards Act gives rights to employees, and one of these is the right to receive a pay stub.

As an employer of a new company, you might be asking, “What is a pay stub?” If you don’t know what a pay stub is and are not currently giving them to your employees, you need to start doing this immediately.

A pay stub is a document that you provide each employee with every paycheck they receive.

Would you like to know more about what pay stubs are and what you should include on them? If so, continue reading this guide to learn the answers to these questions.

First Things First: What Is a Pay Stub?

Employment pay stubs are documents you give to your employees with their paychecks. If you pay them electronically, you can email them a copy of their pay stubs or hand them out.

You can also use software that allows your employees to view their pay stubs and payment information online.

A pay stub tells the employees vital details about their earnings. Employees look forward to seeing these documents, as they reveal a lot of essential facts about their earnings.

The Details You Must Include

You probably understand what a pay stub is now, but you might be wondering, “What do you put on a pay stub?”

Here is a description of some essential things you should include on the pay stubs.

The Employee’s Information

Each pay stub you create should begin with the employee’s information. The information you should add to the stubs includes the employee’s name, address, and social security number.

You can also add the withholding rates and exemptions the employee requested when he or she initially started working for your company.

The pay stub should clearly state who the stub is for, and you can do this by including the details listed here.

The Dates of the Pay Period

Next, you should ensure that the stubs indicate the pay period dates. If you pay your employees weekly, the date range should be for one week, and you should state the precise dates.

For example, the pay stub might state that the pay stub covers the work from January 1, 2020, to January 7, 2020.

It’s also helpful to include the date you issue the paychecks. If you issue them one week later, the pay stubs might include the date of January 14, 2020.

The Gross Pay for the Period

A pay stub should also reveal the employee’s gross wages for the pay period. If the employee receives a salaried income, the amount will likely be the same every pay period.

If the employee gets paid by the hour, you must list the number of hours worked and the pay rate per hour.

Somewhere on the check, it should state a total next to a label that says “gross wages.”

The Withholdings

You must also include every withholding amount and purpose. The main thing you must withhold from paychecks is taxes. You’ll have to list each type of tax and the amount of money you withheld for that tax.

Withholdings decrease the amount of money an employee receives on his or her paycheck.

The Deductions

Deductions also decrease the pay a person receives, but deductions are not the same as withholdings.

Employees generally have deductions for things they pay from their checks. These include wage garnishments, healthcare premiums, and 401k contributions.

The Net Pay

When you add up all the withholdings and deductions, you’ll have the total amount of money you must keep from the employee’s earnings. You can subtract that amount from the total wages for the pay period to reveal the net pay.

The net pay should equal the amount the employee receives on his or her paycheck for the pay period.

Why Employees Need Them

While some employees may never look at their pay stubs, others will carefully examine them each time they get paid.

One of the reasons employees need these is to verify that their employers paid them correctly for the pay period. Without a pay stub, an employee cannot see how much they earned and how much was withheld. They have to assume their employers paid them the correct amount.

Secondly, some employees use these stubs to track their earnings for tax purposes. They can use these to see how much they’ve paid in taxes for the year, and they might need this to keep up with their tax liability.

Employees may also view their stubs to see how much their employees charge them for expenses, such as health insurance costs.

According to one report, 82% of employees have experienced an error with their pay at some point in time. They wouldn’t have caught these errors if they didn’t have pay stubs.

Employees also need these if they want to apply for loans. When you apply for a car loan, personal loan, or mortgage, the lender will ask for proof of income. How can you prove that you have a job or how much money you earn without pay stubs?

Providing recent pay stubs to a lender is the ideal way to prove that a person has a job (and the amount of income they earn from that job).

How to Create Them

Now that you see how vital pay stubs are, you’ll need to find a way to make them. Some employers use accounting software that creates forms while doing payroll.

Others use pay stub generators to make pay stubs for their employees. If you don’t have software that prepares them for you, this is the best option for producing the pay stubs you need for your workers.

Learn More About Pay Stubs

As an employer, it is essential to understand the answer to, “What is a pay stub?”

If you don’t know the answer to this question, you might not provide these to employees, which could frustrate or inconvenience them. Now that you know what they are, it’s time to start creating them for your hard-working employees.

If you enjoyed this article and would like more information about this subject, check out other articles on our blog.

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