Pay stub, also known as pay slip is extremely important not only for employers but employees alike. In its simplest definition, a pay stub is a document that itemizes the payment details of an employee. It shows the amount of wage an employee earned during a specific period. Besides, a pay stub also includes taxes and other deductions deducted from total earnings. Through proper understanding of these documents (pay stubs) an employer will always be in an easy position to solve any payroll errors should they occur. On the other hand, they also help employees decipher their paychecks. Pay stubs do vary from one state to the other and can be issued either as an electronic or printed form.
For many, making a pay stub may present a significant challenge. However, this article takes you through a step to step guide which will enable you to make a pay stub nice and easy.
Making a pay stub can present a significant challenge to many business owners. While they can be made through handwriting, no one wants to go through the process as it’s long and tiring. Therefore, if you want to make pay stubs easily, you can always use the accounting software and programs found online. Besides, there are thousands of websites that provide pay stub templates. All you need is to fill the details and get them printed out.
Blank USA Pay Stub
Company payroll Invoice
Employee Payroll Record
Company Pay Stub
Free pay Check Stub
Instructions for Viewing Benefit Deductions
Online Pay Stub
Pay check explanation
Pay Check Worksheet Pay Stub
- MS Word
PayStub for an employee
Pay Stub Word Template
Salary Pay Stub Template
Sample pay slip
Wells Fargo Bank Payroll Check
Uses of a pay stub
A pay stub does contain vital information that can be used by both the employer and the employee. By receiving a pay stub, an employee can keep a good record of his/her payments. Besides, they can view the pay stub and counter-check whether their payment is done correctly as well as understand the deductions levied on their income.
Employers also use pay stubs for various purposes. First, they use it to settle any errors/divergences that may occur with the employee’s payment. For instance, if there occurs any problem such as underpayment among others, the employer can simply address the issue using the pay stub records. In addition, an employer can use the pay stub to fill out the employee’s tax form.
Gross pay is the total amount that an employee is supposed to get before applying any deduction. In other words, it’s the amount that an employer lists when making a salary offer. There are two types of gross pay- one calculated on salary and the other on an hourly wage. For salary, you take the annual salary then divided by 12 to get a monthly salary. For employers earning hourly wages, their gross is calculated by multiplying the hourly pay rate by a number of hours worked.
Total taxes and deductions
If there is one reality that frustrates most employees is taxes and deductions. Despite having a huge gross pay, no employee goes home with the total amount. Some are deducted either as taxes or any other deduction that may imply. The following are some common taxes and deductions you are likely to find in a pay stub.
- Employee tax deduction. These taxes are usually deducted by the government agencies such as the IRS or the State tax departments.
- Local tax. These are tax charged with some metro areas to pay for the local government services.
- Benefits insurance deductions. These deductions are usually made to cater for health insurance and other employee benefits.
- FICA. FICA is a common tax which stands for the Federal Insurance Contribution Act. In other words, it’s your contribution to Medicare as well as social security.
- Retirement/pension plan contribution. In some cases, your pay stub may include retirement or pension contribution plans. These contributions are meant to sustain your income when you retire.
- Wage garnishments. A wage garnishment is a withholding amount by your employer to repay a debt that you might be having. This may include family support contributions among others.
This is the amount an employee pockets after the total deductions have been catered for. So to speak, it’s the amount deposited directly to their bank accounts.
Understanding your earnings
Not all pay stubs have a similar layout. However, the basic information contained is more or less similar. At the top of your stub, you’ll find the details of your employer such as name, address and paycheck date. After the address information, there should be the gross pay. The gross pay will depend on payment periods i.e. weekly, bi-weekly, and monthly. Also, you can locate your deductions as well as the net pay in the pay stub template.
It’s also crucial that you identify the share of your salary that goes to the federal tax. Usually, this amount depends on the exemptions that are dictated by the W-4 form.
Also, there is the column for state tax. Again, the amount of tax that goes to states depends on which state you live.
Another deduction to identify is social security. This amount is meant to cater for your retirement scheme and can be charged at a rate of 6.2 percent of your total earning.
Besides working, your health is the utmost priority. Therefore, your employer will always insure it by deducting some amount to go for Medicare. It’s charged at about 1.45% on both the employer and the employee’s paycheck.
Novelty pay stub
The novelty pay stubs are replaced pay stubs that provide a realistic-looking payslip document. They are only used for entertainment purposes or to offer as a surprise or practical jokes. Motivational speakers may also use them to inspire others. They do contain:
- Employer information
- Employee information
- Payment period dates reflected in payslips
- Total earnings
- Net pay
Instant pay stub
These are pay stubs that are created almost immediately when the need arises. They do include the following:
- Employer details
- Employee’s details
- Date of pay
- Gross earnings
- Total deductions (Medicare, social security, federal tax, state tax)
- Net pay
Direct deposit pay stubs
These pay stubs are normally deposited directly into your bank account. Once you’ve provided your employer with your bank information, the stubs will always be deposited to your account nice and easy. The direct deposit pay stubs do contain the following information:
- Address details both for employer and employee
- Gross pay
- Taxes withheld
- Allowance and benefits
- Net pay
Hourly pay stub
Hourly pay stubs provide the payment details for employees receiving wages on an hourly period. These stubs do contain:
- Employers information
- Employees contact information
- Gross wages
- Hourly rates
- No of hours worked
- Taxes incurred
- Other deductions
- Net pay