In many workplaces, employees receive pay stubs along with their paychecks or can generate them using online tools like a pay stubs generator. If you are unfamiliar with the term, a payment stub’s purpose is to inform the employee of how they arrived at the net income, including the funds withheld from the gross pay. Even though no federal laws demand employees to receive pay stubs courtesy of the FLSA (Fair Labor Standards Act), it is mandatory in some states. In this article, we look at some of the elements of a pay stub. So read on to learn more.
What Should a Pay Stub Have?
Common elements should be present in pay stubs. Typically, they should have in them the amount per pay period and the year-to-date value. The following are what to expect:
- General Information – Information that identifies the person is included. This can be the name and address of the employee and employer. The social security number is also very important. Employees who are paid by the hour can easily access this information and amend it where necessary. It is standard to collect this information early before the employees commence work.
- Gross Wages – These are the employee’s earnings before the deductions are made. If employees are paid per hour, the gross wage is calculated by multiplying the hourly rate and hours worked in the given period.
- Tax deductions – A pay stub includes and identifies the taxes withheld from the check. This includes unemployment taxes, state tax withholding, medicare withholdings, and social security tax.
- The pay period includes the total hours worked and the days the payment is attributed.
- Employee benefit deductions include what was withheld for the employee to ensure certain contributions. Things like health saving accounts, retirement contributions, and insurance payments.
- Voluntary deductions – Here, the line item might include the amounts the employer withholds every month to remit to organizations that the employee has authorized. Most popular in these deductions is the regular charitable contributions.
- Payment adjustments – If there are changes, such as retroactive pay or overpayments, they are reflected under payment adjustments in the stub.
- Net pay – Finally, the net pay reveals the amount the employee takes home after deductions from the gross salary.
Should You Offer Pay Stubs to Your Employees?
The FLSA (Fair Labor Standard Act) requires businesses to track their employees’ hours; however, how they do it is left to them entirely. However, some states, such as California, require employers to offer their employees pay stubs. This means that residents of California are required by law to present to their employees a pay stub every pay period. But even though it is not a requirement, these pay subs offer benefits to the business owner.
Benefits of Pay Stubs to the Employer
Issuing pay stubs helps track deductions, employee hours, pay, and taxes. Knowledge of the employee’s gross wages and net pay allows you to spot mistakes quicker and note discrepancies. This allows you to fix them early enough to avoid issues later with your benefits partners, employees, or the IRS. It can be challenging to manually keep track of the information you need for your pay stub, but luckily, there are tools that help you do that.
How Can You Make a Pay Stub?
You can use special payroll software to create professional-looking paycheck stubs for employees. The tools available are so many and easy to use. When you select a pay stub tool, all you have to do is key in the relevant information, and the software then creates the paycheck stub for you. These can then go through the printer, or you email them to your employees.
As a business owner, you want what’s best for your business, and pay stubs can offer you many benefits. You can automate the process to ensure your employees receive them every month and use that information to monitor the pay and deductions of your employees.