Pay stub Definition & Meaning

A pay stub is part of a paycheck which details the hours worked, taxes paid and wages earned for a specific pay period and year-to-date payroll. Employees receive either electronic or printed payroll pay stubs, but with the rise of direct deposit, electronic pay stubs are becoming more prevalent. In the end, all the information on a pay stub leads to one key number—the employee’s net pay or take-home pay, which is how much money they’re actually bringing home on payday. Paycheck stubs include both the net pay for the given pay period and the YTD net pay.

Traditionally, the pay stub was a paper document attached to a physical check or included in a wages envelope. Having paper check stubs available is also a great backup for a time when technology may fail. Furthermore, depending on the size of your business and the number of employees you have, paper check stubs may be less costly than a subscription to payroll software.

How Can I Determine My Year-To-Date Income From a Pay Stub?

More detailed definitions can be found in accounting textbooks or from an accounting professional. Create a pay stub for your employees in no time with this easy-to-use template. A pay stub is a tool one can use to understand how much money you have coming in and where your money is going. Understanding and reviewing the elements of your pay stub from a young age is important to growing strong financial habits. There are generally two different options when it comes to creating check stubs.

Finally, your paystub can be essential in holding your employer accountable. If you check your pay stub regularly, you’ll be able to notice and rectify any payment inaccuracies, tax withholding issues, and more. The amount you are being paid for the current pay period (whether it’s weekly, biweekly, twice monthly, or monthly) generally comes first on your pay stub and is the most straightforward https://www.bookstime.com/articles/what-is-a-pay-stub figure to understand. Once you enter all the relevant information, the pay stub tool will create the pay stub for you. Many professional employer organization (PEO) services do the payroll for you and will provide employees with a pay stub so that you don’t have to do the work of creating it on your own. The hourly rate and hours worked should be listed under gross earnings for hourly employees.

my smart money

In most jurisdictions, you are legally entitled to see your pay stub. Get up and running with free payroll setup, and enjoy free expert support. As an employee, seeing your take home pay and what was taken out for tax purposes can be beneficial. You can use it as a guide when creating a budget to properly understand how much is coming in and where your money is going. Rippling, Gusto and OnPay are three of the best payroll processing service providers available to employers.

• In fact, independent contractors and employees must be treated separately.
• If a copy of the lost pay statement is needed, employees can usually request one from their employer’s HR or payroll department.
• Deductions could also include charitable contributions, payments toward loans, and any other voluntary or involuntary deductions (e.g., child support).
• More detailed definitions can be found in accounting textbooks or from an accounting professional.
• They may also show other employee information such as the amount of vacation time owed or used.
• With the ease of direct deposit, many people never see—or review—an actual paycheck or pay stub.
• In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements.

Between state laws and the Fair Labor Act that compels you to provide one, check stubs are also quite handy for employees. It helps them keep track of their pay, track deductions, and can be used for references. This is especially for cheques deposited directly to employee bank accounts. And should they ever want to leave your company for somewhere else or seek a loan, proof of payment in the form of a check stub might be required. A pay statement is a document that summarizes an employee’s gross pay, taxes and deductions, and net pay. It can be provided in printed format with a paycheck or made available electronically.

How to read a paycheck or pay stub

We strive to provide you with information about products and services you might find interesting and useful. Relationship-based ads and online behavioral advertising help us do that. These are items you have elected to pay for, such as retirement or insurance benefits. Kimberlee Leonard has taken her professional experience as an insurance agency owner and financial advisor and translated that into a finance writing career that helps business owners and professionals succeed.

• Both have different rules on deductions and what income can be taxed.
• While the above elements are all commonly found on paystubs, they may vary depending on your personal circumstances.
• It is good practice to review your pay stub when received and make sure there are no discrepancies.
• Paystubs are important because they lay out information about an employee’s wage during a certain period of time.
• Some states don’t require employers to provide check stubs at all, though it may still be beneficial to do so.
• On the pay stub, create a separate line for each tax and show the amount withheld for the current pay period and year-to-date.

HSAs are designed for those who have a high-deductible health plan (HDHP). The money you put into an HSA or FSA can be used tax-free to pay for certain out-of-pocket healthcare costs as they arise. If you are enrolled in one of these programs, your contributions to your account will also show up on your paycheck. Sometimes, the amount of federal income tax deducted from your earnings may be too high or too low. This could be due to a job change or the birth of a child, for instance. If your circumstances change, then you should inform the IRS or your company’s human resources (HR) department as soon as possible.