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Understanding a Pay Stub and its Contents

A pay stab is part of the paycheck that contains the details of the employee’s pay. It lists down the wages earned for the pay period and year-to-date payment. It also indicates the taxes and other deductions made from the wages of an employee. The pay stub shows the net pay of the employee.

As an employer, you can provide your employees with printed or electronic pay stubs. It is a requirement by some states to give the workers the pay stub. Each state has different type of information that is to be included in the pay stub. It is good to keep 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. For the employees, this is 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 an employer can use the pay stubs to reconcile any inconsistency with employee pay. Whenever an employer raises an issue about their pay, the payroll stub can be used to resolve 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.

Gross wages are the starting point of a worker’s pay. Gross wages include money owed to the employee before the deductions are made. The gross pay is calculated differently based on whether the employee is paid a salary or hourly. When calculating the hourly pays, the hourly rate is multiplied by 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.

On the payment day, workers will not take home the gross salary. Payroll taxes, as well as other deductions, are made to reduce their earnings. The pay stub will list down the deductions allowing the employee to see the amounts that have been taken from their gross pay. Deductions include the employee tax deductions, benefits and other deductions, as well as employer contributions.

Net pay is the amount that remains after removing the deductions from the gross salary. This is the amount that the worker will take back home. It is the money that the employer will indicate on the worker’s paycheck or deposit into their bank account.

The pay stubs records net pay hence you can find both the current net pay for the pay period and the year-to-date net pay.

What Research About Payroll Can Teach You

What Research About Payroll Can Teach You