What is a pay stub and how practical is it for your business?
Each year around tax season, employees and employers gather pay stubs. These pay stubs go to accountants and CPAs for tax purposes. But what is a pay stub? And how is it practical for your business?
Continue reading, and you will be well-versed in pay stubs.
What is a pay stub?
A pay stub is a document stating the overall pay of employees. The pay stub includes any deductions.
Pay stubs have an incredible amount of detail, including employee and employer addresses and names. Pay stubs include medical insurance deductions, tax deductions, and retirement deductions. Pay stubs also possess social security information. A pay stub contains information about salary and the amount an employer pays an employee.
Basically, a pay stub is a paper trail that breaks down the amount of pay an employee receives.
Is a pay stub the same as a paycheck?
A pay stub lists tax information, deductions, and payment amounts; that sounds like a paycheck! Is a pay stub the same as a paycheck? Not exactly. Although a pay stub and a paycheck list similar information, the two things are different.
You can treat a paycheck like cash because it is worth money. If you receive a physical paycheck, you can bring it to the bank in exchange for money. A paycheck is a way for an employer to pay an employee. A paycheck is a paper record that lists tax information and deductions. A paycheck also lists a value amount that states what it is worth.
A pay stub contains similar information as a paycheck. Sometimes, a pay stub is attached to a paycheck. When you bring a paycheck to the bank, they will remove the pay stub and take the check. You save the pay stub for your records. The pay stub contains similar information, but a pay stub does not have intrinsic value. A pay stub has more information on it than a paycheck.
Basically, a pay stub has more cumulative information than a paycheck.
What information goes on a pay stub?
A pay stub is a source of a lot of information. The pay stub document contains salary information, tax deductions, the number of tax deductions, insurance costs, and any retirement plans. In addition, the pay stub has information about the rate of pay, date of employment, and date of payment.
The pay stub has personal information, like an employee’s legal name, mailing address, social security number, frequency of employee payment (hourly, weekly, bi-weekly, monthly.) Finally, a pay stub has the name of the employer and the address of the employer.
Pay stubs include tons of information, anything that a tax preparer or government agency would want to know.
How to create a pay stub
A pay stub offers a bevy of information, and it is practical for your business. So how do you create a pay stub? There are a couple of ways to make a paystub. You can use a pay stub template, pay stub generator, or online payroll service.
Pay stub template
An option for creating a pay stub is a pay stub template. A pay stub template will allow you to alter and create a pay stub to fit your needs. A benefit of a pay stub template is that it is highly customizable. A drawback of a pay stub template is that you need to know what you are doing. That means familiarity with local and state taxes is essential.
Once you create a pay stub template that you like, you input the information and have pay stubs for your business.
Pay stub generator
A pay stub generator will make calculations for a business. You can input the information you want, and the pay stub generator does the hard work. A pay stub generator is less customizable than a pay stub template, but it is easier to use. Most pay stub generators are familiar with local and state taxes and generate these items for you.
Online payroll service
An online payroll service will create a pay stub for you and your business. The ease and convenience of online payroll services are unrivaled. Give the online payroll service information about your company, and the online payroll service does the rest. Consider an online payroll service if you have the budget to allocate to such ventures.
How pay stubs help your business
A pay stub is not only practical for your business; it is necessary. The job of employers is to keep track of the payroll. This job includes understanding how much each employee earns.
Pay stubs also help with maintaining knowledge of tax and insurance documents. Should an audit or tax dispute occur, you will have documentation of all expenses. Pay stubs are a form of protection for a business. On a pay stub, a company can list expenses and fund allocation.
An employer can show 401k, insurance, and tax deduction information with a pay stub.
Any business owner wants to keep detailed records, should any litigation or audits occur. A pay stub facilitates a paper trail.
The pay stub is not only practical for employers; it is helpful for employees as well. Employees understand paycheck deductions because of pay stubs. Pay stubs list information about all deductions and salaries. If an employee wishes to buy a house, a car, or take out any loan, the employee will need a pay stub to provide documentation to the bank.
A pay stub promotes transparency between employers and employees. With a paystub, a line of communication is open. Employees know what earnings deductions, retirement, and insurance information. There are truly no downsides to a pay stub.
The bottom line
A pay stub is a valuable informational tool that provides information about employers and employees. Salary information, names, addresses, deductions, employment dates, and payment frequency are all pieces of information that go on a pay stub.
A pay stub is practical because it is a bookkeeping tool that tracks expenses and costs. Employees and employers will enjoy the transparency that a pay stub provides. If you need to create a pay stub, you can check out the online paystubs creator.
