Understanding the Basics of a Pay Stub
A pay stab is a paycheck section that displays information about the employee’s pay. It itemizes the salaries earned during a pay period and the 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 net pay of the employee.
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. You can retain a copy of each payroll stub for your payroll records.
What is the Use of Pay Stubs
A pay stub contains information that applies to both the employer and the employee. For the employees, this is 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. Whenever an employer raises an issue about their pay, the payroll stub can be used to resolve the problem. The pay stubs are also useful when filing taxes as you can apply to them to fill the employee’s Form W-2.
What is Included in the Pay Stubs
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 are the starting point of a worker’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.
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 itemize the deductions so that the employee can see the amounts that have been taken from their gross pay. Some of the common deductions on a pay stub include the employee tax deductions, employer contributions, and benefits and other contributions.
Net pay is the amount that remains after removing the deductions from the gross salary. This is the amount that a worker will take home. This is the money that an employer will write 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.