A pay stub is a part of a paycheck that lists details about the employee’s pay. It lists down the wages earned for the pay period and year-to-date payment. It also shows the taxes and other deductions taken out of an employee’s earnings. It then shows the net pay the worker gets.
As an employer, you can provide your employees with printed or electronic pay stubs. Some states require that employers offer their employees with pay stubs. The information that is added on the pay stub will vary depending on the state. It is good to keep a copy of each payroll stub for your payroll records.
The Work of Payroll Stubs
The information that is included in a pay stub is useful to both the employer and the employee. The employees are offered with the pay stubs as a record of their wages. They can use the information to assess whether they were paid correctly and also appreciate their deductions.
The an employer can use the pay stubs to reconcile any inconsistency with employee pay. If an employee raises an issue about their pay, you may need to solve it by looking at the pay stub. You can also use pay stubs to fill out the employee’s Form W-2 during tax filing.
The Components of a Pay Stub
There is a lot of information included in the pay stub to help both the employer and employee keep track of payments and deductions. Below is the information that is contained in the Pay stubs.
Gross Wages: Gross wages form the starting point of an employee’s pay. Gross wages include money owed to the employee before the deductions are made. The gross pay is calculated differently based on whether the employee is paid a salary or hourly. To get an employee’s hourly pay, increase the hourly rate with the number of hours worked. When it comes to the salaried workers the annual salary is divided by the number of payment periods in the year.
On the payment day, workers will not take home the gross salary. Payroll taxes, as well as other deductions, are made to reduce their earnings. The pay stub will list down the deductions allowing the employee to see the amounts that have been taken from their gross pay. Deductions include the employee tax deductions, benefits and other deductions, as well as employer contributions.
Net Pay: The net pay is the amount left over after the deductions have been subtracted from the gross pay. This is the amount that a worker will take home. It is the amount that the employer indicates on the employee’s paycheck or direct deposit into their bank account.
The pay stubs records net pay hence you can find both the current net pay for the pay period and the year-to-date net pay.