But if the contribution comes from the employer, it may be included in the employee’s gross wages. For instance, say an employee contributes 3% of every paycheck to a 401(k), and their employer matches that contribution. The employee’s contribution would be a deduction from their paycheck, while the employer’s contribution would what is a pay stub be listed as part of the employee’s gross wages. Gross wages are the full amount an employer pays before deductions. Overtime pay and additional income, such as paid time off, bonuses, and payroll advances, are also included under gross wages. A pay stub is a document that accompanies an employee’s paycheck every pay period.

This is the total amount of income and deductions since the start of the year, including the current pay period. Every pay stub will show the current total for the pay period itself as well as your year-to-date totals. Remember, pay stubs are important records of your income and serve as proof of income and employment.

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Fortunately, you can use a pay stub creator to create professional pay stubs for your employees. A paycheque is a payment of wages, and a pay stub is a record of wage payments. They are both distributed by employers to their employees after a predetermined pay period.

• Gross wages are the total amount of financial compensation owed to an employee before any deductions are made.
• Doing payroll this way can mean relying on a jumble of spreadsheets, paper documents, separate websites, and so forth, every pay period.
• While there is no federal law requiring employers to provide pay stubs, only nine states have left the matter unresolved.
• However, the FLSA does not guarantee employees a right to view their payroll records.

The earnings section shows your earnings from the pay period and includes overtime. It also shows pre-tax deductions for different employee benefits that you may receive, such as health insurance and retirement contributions. If you have hourly workers, their gross wages are calculated by multiplying their hourly rate by the number of hours worked in any given pay period. So, for example, if you have an employee that has a $20 hourly rate and they work 80 hours in a pay period, their gross wages would be $1600 ($20 x 80). All of the information you’re required to keep may go beyond what’s included in an employee’s pay stub.

What is a pay stub

Employees who don’t have pay stubs and need to prove their source of income can request copies from their employer. Alternatively, lenders sometimes accept bank statements or copies of previous tax returns. Pay stubs help employers keep records of payroll information, and they also make it convenient for employees to understand how and how much they are getting paid.

These FLSA standards apply to employers who hire non-exempt employees and earn $500,000 per year (or more) or are engaged in interstate commerce. For the remaining states, issuing pay stubs is mandatory, but the requirements aren’t the same. Many companies list codes on their paycheck specific to how they do business or the benefits they offer to employees. For example, some businesses may list health insurance as HS while others may call it HI.

What Is on a Pay Stub?

They help employees decipher their paychecks and are useful to employers when solving wage and hour disputes or tax discrepancies. Depending on the state, pay stubs may also be part of payroll compliance. For employers, pay stubs prove their business is paying their employees as promised.

• Below, we break it down so it’s easier to understand when you start earning an income.
• The information on this page is for informational purposes only and is not to be construed as legal advice.
• To calculate a salaried employee’s gross pay for a single pay period, divide their annual salary by the number of pay periods in the year.
• For instance, say an employee contributes 3% of every paycheck to a 401(k), and their employer matches that contribution.
• It can also be used as proof of income or work, which is frequently required when asking for a loan or other type of credit.

Employers often have their own payroll taxes and contributions to pay. Instead, the employer pays the sums directly to the local tax authority or relevant fund. For example, there’s https://www.bookstime.com/articles/fixed-asset-accounting no federal law mandating the use of pay stubs in the US, but certain states require them. If you don’t comply with local laws and regulations, you may incur fines or legal action.

Deductions are cash amounts taken out of the employee’s gross wages. They include taxes, contributions, and even allowances like meals. It’s worth noting, in some jurisdictions, employers are required to keep their employees’ pay stubs on record for a certain period. If you use payroll software, you should be able to access your employees’ pay stubs online through the payroll system. Many jurisdictions require employees to pay taxes and contributions, such as income tax, national insurance, and unemployment tax.