Understanding a Pay Stub and its Contents
A pay stab is a paycheck section that displays information about the employee’s pay. It lists down the wages earned for the pay period and year-to-date payment. It also shows the taxes and other deductions taken out of an employee’s earnings. The pay stub, shows the actual amount an employee receives.
You can give your workers either an electric or printed pay stub. 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. It is good to keep a copy of each payroll stub for your payroll records.
What is Payroll Stubs Used for
The information found in the pay stub is useful to both the employer and employee. The employees are offered with the pay stubs as a record of their wages. Employees can review their pay stubs to ensure that they were paid the correct amount and understand their deductions.
The employer can use the pay stub to settle discrepancies with employee day. Whenever an employer raises an issue about their pay, the payroll stub can be used to resolve the problem. 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 pay stub contains a lot of information that will help the employer and the employee to keep track of deductions and subsidies. Below is the information that is contained in the Pay stubs.
These are the starting point of an employee’s pay. Gross wages is the money that the worker is owed without the deductions being made. The gross pay is calculated differently based on whether the employee is paid a salary or hourly. When calculating the hourly pays, the hourly rate is multiplied by the number of hours worked. To get the salaried employee’s gross pay, divide the annual salary by the number of pay 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 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 once the deductions have been made from the gross pay. This is the amount that the worker will take back 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.