They can also keep abreast of regulatory changes to guarantee good relationships with employees. It is a record of the amount paid to an employee over a certain period. For employers, it goes beyond the mere task of communicating the wages or salaries of their workers to them.
What Information Goes on a Pay Stub?
Fortunately, pay stub software facilitates employee pay and record-keeping for prominent organizations by auto-generating pay stubs for employers. A pay stub, also refer as a pay statement, payslip, or paysheet is a periodic statement of an employee’s income and deductions. This can be used as evidence of payments received/deductions made.
- Different states have different requirements for employees’ pay stubs.
- The only difference is that employers who receive electronic stubs must have an easy way to access them, namely by printing them.
- Under the Fair Labor Standards Act (FLSA), employers must retain payroll records for three years and save documentation showing how they determined wages for two years.
- If you are paid by ACH direct deposit, your pay stub is likely issued on its own or as a digital document.
- The method of calculation of the gross earnings is different for hourly and salaried employees.
- A pay stub is what you give employees with their paycheck to outline the details of how much was earned in gross pay and what deductions were made, leaving them with a net pay amount.
Generate Pay Stubs
However, the general rule of thumb is to keep them for at least 3 years. The contributions are to Social Security and Medicare, and they’re listed separately on pay stubs. For regular employees, 6.2 percent goes to Social Security while 1.45 percent goes to Medicare.
- Pay stubs have often been viewed as simply receipts of payment.
- Even careful business owners can’t rule out human error, and human error could land you in a world of hurt.
- Retirement contribution, which includes 401(k) or 403(b) plans, is another that has to be measured and shown properly.
- This way, you’ll get the exact amount of the salary your employee should receive.
- Fortunately, pay stub software facilitates employee pay and record-keeping for prominent organizations by auto-generating pay stubs for employers.
- If just one employee prefers the current method, the employer must stick with it.
Main Elements of a Pay Stub
No payroll process is complete without a properly formatted pay stub. It’s the document that tells your employees the background story of their pay stubs meaning paychecks, and it’s vital for the bookkeeping needs of everyone involved. States with no requirements have no state-level legislation, meaning employers don’t have to provide any pay stub.
- This makes you more vulnerable to payroll errors like typos for critical information.
- Just head to your state’s Department of Labor website to find out which rules apply to you.
- Sierra Campbell is the lead small business editor for USA TODAY Blueprint.
- Paychecks, on the other hand, inform employees of just their net pay.
- The employer subtracts any money owed, like owed income taxes or failed to repay loans, and sends it to the government on the employee’s behalf.
- Also included under the employee’s personal information are their filing status and number of dependents.
- It’s a good practice to provide pay stubs since it’ll save you from many administrative headaches.
Garnishments only apply to employees who are legally obligated to withhold a portion unearned revenue of their earnings by a court. Child support and large debt payments are example scenarios where courts may require this situation. One way to counter confusion caused by calculating pay is by annotating pay stubs to pre-empt employees’ questions. The pay stub also mentions which days the employee worked, how much they were paid each day, and their total hours.
If a physical paycheck is issued, it is usually accompanied by a pay stub that accounts for the amount of the paycheck. If you are paid by ACH direct deposit, your pay stub is likely issued on its own or as a digital document. Even if the pay stubs are not provided to the state regularly, an employee has full Car Dealership Accounting authority to access the payroll files, which the employer can’t deny. This is because the government finds it suspicious if any company/business does not offer transparency around the wages of the employees. Therefore, all the states vary in their pay stubs requirements, but the employers must be ready to show the payroll documentation whenever asked. A pay stub, also known as a pay slip or paycheck stub, is essentially proof of a paycheck.