An Insight into Paystub & Its Importance
If you are running a business, you should know what kind of information a paystub contains. Without a good hang of these details, you can never identify if there is any error on a paystub.
Pay Stub – What Is It?
A pay stub or check stub contains the details about the employees’ salary. It details every employee’s earning for a certain period as well as year-to-date payroll. It also lists all types of tax and net income after tax deduction.
Some states in America require you to give pay stubs to your employees. However, the details it includes vary from one state to another. You are allowed to keep a record of paystub handed over to each employee.
Information included in a check stub benefits both employers and employees. For the employees, it keeps track of their wages. By checking his/her pay stub, a worker can immediately know if he/she has received the right amount of wages and also get a clear hang of tax deductions.
In case of discrepancies, the employer can use the pay stubs for settlement. In case of any problem with an employee’s pay, you can use the pay stub to sort out the issues. It is also useful to fill out W-2 form for each employee during tax payment.
A Pay Stub Contains The Following Information:
Several details are enlisted on a pay stub. It keeps accurate track of wage payment and tax deduction for every employee. These pieces of information can be categorized under three categories:
- Gross Income
- Taxes, Tax Deductions & Contributions
- Net Salary
Gross Income is the first point enlisted on an employee’s pay stub. It refers to the wage before any tax deduction is made. Gross wage depends on if the employee is paid salary or on hourly basis. For those receiving hourly wages, multiply the hourly rate with the amount of hours worked. To calculate the gross salary, divide the yearly income by the number of pay periods per annum.
Gross pay details are shown into two columns. The first column shows the current gross wage or income for the pay period whereas the other column shows year-to-date information. An employee’s pay stub includes the following points-
- Hours Worked
- Pay Rate
- Gross Payment
- Taxes & Deductions
- Other Benefits & Deductions
- Employer’s Contribution
As the check stub includes all types of earnings and deductions, it is simple to check for any error. Accuracy is most important while paying to the employees and an automatic pay stub generator does that on your behalf.
A pay stub is issued in every employee’s name and contains information about the employee, including his/her name, address, contact number and other details.
Generating a Pay Stub
In this age of technology, handwritten pay stubs are almost obsolete. Businesses have switched to automatic pay stubs long ago and small companies are also jumping to the bandwagon. Many software programs are available these days to help you develop an online check stub. Try it for your own benefit.