As an employer, you should perfectly understand information on a pay stub to help identify errors on your payroll. The information contained on a pay stub can also help an employee make better financial decisions. Typically, a pay stub is a document that accompanies a paycheck and itemizes things regarding an employee’s pay. In the pay stub, an employee will discover the deductions and contributions taken out of the amount that he or she has earned within a given period. In some of the states, it is mandatory for employers to have a pay stub and issue it to all the employees on every payment. The state is involved in pay stub since it is a useful document in tax payment. Here is a piece of important information that you should know about a pay stub.
No doubt, a pay stub is a useful document to both an employee and employer. To an employee, a pay stub is a record of their earnings and contributions to items such as insurance and mortgage. Once an employee receives the pay stub together with the paycheck, he or she can review it to ensure there are no errors in the pay and understand all the deductions that were made. For an employer, a pay stub is a vital document for settling discrepancies with employee pay. If an employee raises concern about his or her pay, an employer can easily resolve the issue by looking at the paystub. Also, some employers use the pay stub to fill each employee’s Form W-2 in taxation. In the homepage of this site, you will read more now about the usefulness of a pay stub.
A pay stub provides vital pieces of information to help you and your employee keep track of payments and deductions. The three crucial parts of a sample pay stub are; gross wages, taxes, deductions, and contributions, and net pay. Gross wages is the amount an employer owes an employee before deductions are taken out. Year-to-date totals and current gross pay are the two columns of the gross pay section of a pay stub. Read more now on items in the gross pay section.
Employees do not always take home the gross pay as there are deductions made. In every pay stub, you will realize that there are deductions, contributions, and taxes. Some of the common deductions that you are likely to find in a pay stub include employee tax deductions, benefits, employee contributions such as retirement plans. Here, you will learn some of the things that are taken out of an employee’s gross pay. The last piece of information that you get from the pay stub is the net pay. Net pay is the amount that an employee takes home. Now that you understand items and benefits of a pay stub, you should start creating one for your employees.