A pay stub is a very important part of a paycheck. Whether you give your employees paper pay checks, or use direct deposit for electronic pay checks, a pay stub gives the employee important information about how much you pay them for their services or jobs.
What is a Paystub?
The pay stub contains important information for both the employer and the employee, including hours worked, base hourly rate, any commission or bonuses earned, gross total salary for the pay period, vacation or sick leave pay (if different from hourly rate), taxes, retirement, Social Security, and other deductions from the total payment.
Some employers also include remaining vacation and sick time available to employees, and the hourly rate they would receive from vacation or sick leave if that is different from their base hourly rate. This way, employees can keep up with how much potential time off they have remaining, or how much they have accrued over the past few months or year.
Sometimes, employers also include full year-to-date earnings for employees, which can help them with tax information, retirement account contributions, and other potential long-term payment issues.
Employees can receive pay stubs in either printed or electronic form. In fact, many employers create or download a pay stub template that they then email to their employee every pay period. The employee can then use the email to print out a record for their taxes, and compare the amount in the pay stub to the amount that appears in their bank account through direct deposit.
If you have checks printed, your accounting department or accounting firm may be able to include a pay stub on the check for you. If they do not, then you should consider our free template to include pay check information with the check.
Information on a Paystub:
Large businesses often have their accounting or human resources department take care of paychecks, pay stubs, and tax information, but if you run a small business, you may be the only person available to deal with all of that information. Our free pay stub template can help you get started with the information you need to provide to your employees. When you create a pay stub for an employee, be sure to include:
• The pay check number. If an employee has a problem with their pay check – for example, if the pay check does not show up in their bank account, or they believe their check has less money than it should – you and your employee can both use the check number to verify that the information on the pay stub and the information in the direct deposit are correct.
• Pay period and pay date. Although the employee will probably know when to expect their pay check, it can be important for later financial records to reiterate the pay period (one week, two weeks, one month, etc), and the date the pay check was issued. If your employee is a contractor who is paid in a lump sum or a handful of installments, this can be especially important for verifying the employee receives his or her payments on time.
• Amounts and types of income. If you pay your employees hourly rates, include the base hourly along with the hours they worked. If you have other types of income that your employees earn, such as commission, include that as well.
• Deductions. Employees will especially want to know how much tax, Social Security, and Medicare payments are so they can reconcile that with their final pay check amount. Enumerating any deductions you take can help you address complaints later.
Why Use a Paystub Template?
Our free, downloadable template is a great way to get started when you hire your first employees, but if you have complicated tax or payroll questions, an attorney or CPA can help you get set up according to state and federal regulations.