6 Facts About Payroll Everyone Thinks Are True
A pay stub is a part of a paycheck that lists details about the employee’s pay. It itemizes the salaries earned during a pay period and the year-to-date payment. It also lists down the taxes and other deductions made out of the employee’s earnings. The pay stub, shows the actual amount an employee receives.
Pay stubs can be given either as electronic or printed. It is a requirement by some states to provide pay stubs. The information that is added on the pay stub will vary depending on the state. You can retain a copy of each payroll stub for your payroll records.
What is the Use of Pay Stubs
The information that is included in a pay stub is useful to both the employer and the 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. If an issue comes up about the worker’s pay; you can use the payroll pay stub to fix the problem. The pay stubs are also useful when filing taxes as you can apply to them to fill the 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 include money owed to the employee before the deductions are made. Gross pays are calculated differently depending on whether the employees are paid a salary or on an hourly basis. To get an employee’s hourly pay, increase the hourly rate with the number of hours worked. The salaried worker’s pay is arrived at by dividing the annual salary with 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: The net pay is the amount left over after the deductions have been subtracted from the gross pay. This is the amount that a worker will take home. It is the money that the employer will indicate on the worker’s paycheck or 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.