Every employer needs to learn about pay stub and its usefulness in identifying possible mistakes on the payroll. An employee can also use the information on the pay stub to plan financially. A pay stub is part of a paycheck that provides details regarding an employee’s pay. In a pay stub, an employee will learn about the amount he or she has earned within a given period and all the deductions and taxes. Several states have made a pay stub a mandatory document that every employer should have for all the employees. A pay stub helps employers make tax payments and get refunds. Here is a piece of important information that you should know about a pay stub.
Both employers and employees consider a pay stub a useful document. To an employee, a pay stub is a record of their earnings and contributions to items such as insurance and mortgage. Once an employee receives the pay stub together with the paycheck, he or she can review it to ensure there are no errors in the pay and understand all the deductions that were made. On the other hand, an employer considers a pay stub as a document for settling payment issues with an employee. If an employer receives a complaint from an employee, he or she will look at the pay stub. Also, some employers use the pay stub to fill each employee’s Form W-2 in taxation. In the homepage of this site, you will read more now about the usefulness of a pay stub.
A pay stub acts as proof of payments and deductions. The three crucial parts of a sample pay stub are; gross wages, taxes, deductions, and contributions, and net pay. Gross pay is the amount that an employee should receive before deductions, taxes, and contributions are taken out. Information regarding the gross pay is usually broken down in two separate columns; current gross pay and year-to-date totals. Read more now on items in the gross pay section.
Since there are mandatory deductions and contributions, not employee takes home the gross pay. In the pay stub, an employee will see all the deductions made from their gross pay. Some of the common deductions that you are likely to find in a pay stub include employee tax deductions, benefits, employee contributions such as retirement plans. Here, you will learn some of the things that are taken out of an employee’s gross pay. The last part of a pay stub is the net pay. Net pay is the amount that an employee receives after all the deductions are made. From this discussion, you understand the items on a pay stub and reasons to create one.