A pay stab is part of the paycheck that contains the details of the employee’s pay. It lists down the wages earned for the pay period and year-to-date payment. It also lists down the taxes and other deductions made out of the employee’s earnings. The pay stub, shows the actual amount an employee receives.
As an employer, you can provide your employees with printed or electronic pay stubs. It is a requirement by some states to give the workers the pay stub. The info included in the pay stubs differs from state to 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 receive the pay stubs as records of their payments. Employees can review their pay stubs to ensure that they were paid the correct amount and understand 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. When it comes to filing of taxes; you can refer to the pay stubs to fill out each employee’s Form W-2.
Components of the Pay Stub
The information that is contained in the pay stub is useful to the employer and their worker as it helps them keep track of the payments and deductions. Here is what is listed 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 depending on whether one 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.
Taxes, Deductions, and Contributions: Normally, the employees do not take the gross salary during the payment period. Payroll taxes and other deductions are made thus reducing 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 is the amount that remains once the deductions have been made from the gross pay. This is the amount that the employee will take home. This is the money that an employer will write on the employee’s paycheck or direct deposit into their bank account.
Normally, the pay stub record the net pay thus you can find both the current net pay for the pay period and the year-to-date net pay.