Some call it a pay slip, while others preferably know it as a paycheck stub or just pay stub because essentially they all refer to the same thing – pay stub. For some employers, issuing one isn’t all daunting, others even struggle creating it.
While getting their monthly pay, employees also expect to be issued with a pay slip. They deserve to know exactly what the salary encompasses and how much each is. And though issuing a pay stub isn’t mandatory, according to federal laws, some states require employers to issue a form of a written statement.
But that aside, what exactly is a pay stub?
It isn’t just a mere document with all that’s included in pay, printed and issued whenever an employee requests for it. A pay stub itemizes a person’s earnings during the previous pay period, including the taxes and all the deductions. It even determines whether a person owes the dreaded IRS or should snag a refund!
It basically shows all that a person is entitled to when all the deductions have been factored in, although the items vary by the state where it’s issued. One thing with it nowadays is, it’s issued electronically, and essentially right after the period’s payment is made. And that’s why it’s highly important that the employer knows how to create pay stub, including knowing what its content is as well as how it should look.
You need a pay stub because…
A pay slip includes all the contact details of both the employer and the employee, meaning that it is beneficial to both parties. Employers use it to counter-check the worker’s pay and perhaps note any discrepancies. If an error is identified, rectifying it becomes a breeze. On top of that, filling the employees’ W-2 tax forms is a lot easier with it.
As for the employee, you require it for more than five purposes. It is simple proof that the pay is right, according to the total number of hours worked. It is proof of income that overrides all the other documents provided when one needs to secure a personal loan. Additionally, it helps one prove to the lending facility that the form of employment he or she attached to is permanent.
Information included in a pay stub
If you are an employer who has never created a pay stub before, then you shouldn’t dread the prospect of coming up with one. Generally, pay slips don’t have a universal look as provided they capture the following data, how they appear doesn’t matter. These are the main components of a pay stub.
1. Gross Wages
This is what a person is entitled to get before taxes and deductions are taken out – both gross pay and year-to-date totals. The gross pay normally comes in two forms – hours worked, including regular, overtime, and double-time as well as the pay rate for each of them.
2. All the Tax Payments, Deductions and Contributions
It itemizes all that are subtracted from the gross pay, especially the current deductions. Deductions usually include tax payments made, payroll deductions like insurance premiums and retirement benefit payments.
3. The Net Pay
This comes at the very end as it is what’s left over after subtracting all the various deductions from the gross earnings. This category usually shows what one was paid after a regular payment period as well as the entire year-to-date net pay.
