Whether you have full-time, part-time, or hourly paid employees, sending them checks and direct deposits of their net pay is never enough. An employee may raise questions as to how you arrived at the net figure and how many deductions you made. This is where a pay stub comes in. Pay check stubs are documents that contain details regarding an employee’s pay. It lists the wages earned during the pay period and the date of payroll information. Pay Stubs also include taxes and deductions taken off the earnings. It also shows the total amount received by the employee.
Common Details Found on a Pay Stub
Everything on the pay stub helps keep track of the deductions, payments, and taxes. The documents might vary, with some having more details than others, but some common items don’t miss. These include:
- General Information
- Gross wage
- Employer taxes
- Employee taxes
- Net pay
Your pay stub may or may not have all the above items. Below we look at further details on what each category of your pay stub represents.
The general information we are discussing includes the employees’ details, such as their name, social security number, and address. The stub will also outline the company name and address of the employer. In cases where a payroll app is used, the employee information can be accessed through the platforms, and they can edit and update the information as needed.
Your gross wage is what your employer pays you before any deductions and taxes are taken out. Should you be an employee with nontaxable income, it must be included in your gross wages. Whether an employee is salaried or compensated hourly determines the gross pay. On a pay stub, gross wage information comes in two columns, the year-to-date gross and current gross pay. Others may also include the total hours worked and the pay rate.
There are different deductions from the gross salary depending on where you work, and each must be listed in the pay stub. Payroll tax deductions, employee benefit deductions, involuntary deductions like child support, and voluntary deductions like charitable contributions are the most frequent deductions on the payroll.
The employer is also required to pay payroll taxes for each employee. This includes the taxes in a separate section, the year-to-date and current totals. The payroll taxes include The FUTA tax (Federal unemployment taxes), the SUTA tax (State unemployment taxes), and the employer portion of the FICA tax. You should also check and see if the state you reside in has any other employer-paid taxes.
These deductions reduce the employee’s gross pay. A pay stub will outline all these taxes for the employee to see how much of their gross pay is being withheld. The standard employee payroll taxes include state income tax, FICA tax (Social Security and Medicare taxes), Federal income tax, local income tax, state, and local specific taxes, and state unemployment tax (Pennsylvania, New Jersey, and Alaska).
After all the information on the pay stub, what matters is the net pay, which is the amount the employee takes home. They include the net pay after a given pay period and a YTD net pay. Many employees use direct deposits. An employer must provide a record of the amount sent into their employees’ respective bank accounts for different paychecks.
Having information on what a pay stub entails is essential and will help you understand how deductions are made on your income. Knowing how to create one is also important for a business owner. Pay stubs also let you record how much you have paid your employees over time. This information can be useful if you need to check the accuracy of your payroll expenses.