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A pay stab is part of the paycheck that contains the details of 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. It then shows the net pay the worker gets.
Pay stubs can be given either as electronic or printed. 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. You can retain a copy of each payroll stub for your payroll records.
What is the Use of Pay Stubs
The information found in the pay stub is useful to both the employer and employee. The employees receive the pay stubs as records of their payments. Employees can review their pay stubs to ensure that they were paid the correct amount and understand their deductions.
For the part of the employer, they can be used to settle disagreements with employee pay. If an employee raises an issue about their pay, you may need to solve it by looking at the pay stub. When it comes to filing of taxes; you can refer to the pay stubs to fill out each employee’s Form W-2.
The Components of a Pay Stub
The information that is contained in the pay stub is useful to the employer and their worker as it helps them keep track of the payments and deductions. Read on to find out the information included on the pay stubs.
These are the starting point of an employee’s pay. Gross wages is the money that the worker is owed without the deductions being made. The gross pay is calculated differently depending on whether one is paid a salary or hourly. For the hourly workers, the hourly rate is multiplied by the number of hours’s worked. To get the salaried employee’s gross pay, divide the annual salary by the number of pay periods in the year.
During the payment period, the workers do not take home the gross salary. Payroll taxes and other deductions are made thus reducing their earnings. Deductions are listed on the pay stub to enable the employee to see the amounts 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 employee will take home. This is the money that an employer will write on the employee’s paycheck or direct 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.