Which Information Should You Include In Your Pay Stub? Find Out Here

Which Information Should You Include In Your Pay Stub? Find Out Here

by September 21, 2021

Are you a new employer and trying to get around with terms like Pay Stub? Or maybe you want to double-check with the definition and confirm what information goes in a pay stub.

Whatever the case may be, you have come to the right place. This article will briefly speak on what a paystub is, what information should be on it and why an employer or employee may need it.

What is a Pay Stub

A pay stub is a document that shows the details of an employee’s salary. A paystub details the payment period, work hours, gross pay, taxes, deductions, and net pay.

What Information is on a Pay Stub

The FLSA (Fair Labour Standards Act) requires employers to keep the paystub of their employees. Experts in the industry advise small business owners to get a paystubs generator in order to assist with creating and filling paystubs. They know that not all business owners may have the cash to outsource professionals or employ a full-time accountant to help with it. Some of the important items on the paystub are as follows:

1. Pay Date and Period

The pay date is when the employee gets paid their salary, while the period is for what duration of time. For example, if you get paid at the end of every month, then the period will be for a month, and the date of payment will be a specific day in the month throughout the year. The same format applies even if an employee is on a weekly pay.

2. Addresses of the Employer and Employee

This heading is self-explanatory. It states the details of the current residential address of the employee, the company’s name, and its address.

3. Gross Pay

The gross pay is the amount paid to an employee before taking out the taxes and other deductions.

4. Federal, State, and Local Income Tax

The employer is to deduct the taxes from the employees’ gross pay. The federal tax band applies to everyone who is working. It starts at 10%, the lowest taxable band, and gets as high as 37%, which is the highest band. The state and local income tax bands will vary depending on which state the employer operates their business within.

5. Deductions

After the employer deducts tax from the gross income, then comes other deductions. Deductions depend on the type of business one operates. The business type will affect the packages (medical or retirement), unpaid debts or, even voluntary deductions taken by the employee.

6. Net Pay

Net pay is the take-home pay the employee has to spend after all deductions.

Why is a Pay Stub Important

A paystub is significant for a variety of reasons. The obvious one is that the employee can crosscheck if the amount paid is correct or not. The paystub can also come in handy if there are any tax disputes. An employee may also require it if seeking to take a loan from the bank or they want to show proof of employment when interviewing for a new job.

pay stub

Pay Stubs are crucial documents to keep and maintain as an employer, even when your state doesn’t require that you do so. It saves you a lot of time and effort if a staff requests it. Preparing it is also straightforward, and keeping one helps you with bookkeeping, which is a necessity for employers. Hopefully, you found the article helpful and are now better informed about pay stubs.

Featured image credit: Unsplash

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