Businesses will use various ways to increase their growth and success. Ensuring that your employees are satisfied is one way to boost the success of your business. For you to make sure your employees are cared for, you should provide them with an accurate account on their pay. It is, however, possible for complacency to occur from the employer and the employee on pay stubs since almost all workers get paid through direct deposit.
It would be of great benefit to you as the employer, the employees, as well as the business by clearly understanding a pay stub. Understanding a pay stub will make it easier to detect mistakes, as well as simplify the process if an employee has left. As a result, you will easily avoid getting into problems with IRS and employees.
The first thing is to understand what is a pay stub. A pay stub will act as proof of payment to a worker. It will also itemize employee’s payment for the particular period and the total for that year to date. Pay stubs will also provide details on deductions from the employee’s earnings like tax. You will also be able to see net pay which is what the employee will take home. Again, a pay stub can either be electronic or paper but that may depend on your state requirements.
On the other hand, a pay stub will include information for the employee and the employer. For an employee, a pay stub becomes the record for the wages. An employee can use the information contained in a pay stub to ensure they received correct payment while understanding their deductions.
For the employer, a pay stub would be helpful when securing a loan or for a compensation claim. When it comes to correcting pay discrepancies, pay stubs would make the process easier. Pay stubs should, however, contain certain information.
Some of the mandatory information on a pay stub include gross pay, net pay, taxes, deductions, as well as contributions. Gross pay will include the amount made to the worker deduction. However, gross pay is calculated differently depending on whether an employee is paid hourly or yearly salary.
In case an employee is paid hourly, the pay stub will have hour worked. That information will be crucial because it will help them ensure they get paid for the correct hours worked for during a particular pay period. Also, salaried workers can have the hours worked on the pay stub.
For a non-exempt worker, their working hours may be different which can include regular hours, overtime, as well as double time. However, their pay stubs should indicate hours worked on separate line to eliminate confusion.