A pay stub also called a salary slip or pay slip, is a document that an employer provides to their employee, which details the employee's earnings and deductions for that period. It usually includes information such as the employee's gross pay, the amount of taxes withheld, any deductions for benefits, and the net pay.
Organizations can make use of a pay stub generator to maintain accurate records of their payroll expenses and also ensure that employees are paid accurately.
What forms are pay stubs given?
Pay stubs can be provided in both electronic and paper formats depending on the employer's preference and the applicable laws and regulations.
- Electronic Pay Stubs: Many employers provide pay stubs electronically through online portals or email. Employees can access their pay stubs by logging into the employer's system, and the pay stubs are usually available for download and printing.
- Paper Pay Stubs: Some employers provide paper pay stubs to their employees, which are typically handed out in person or sent by mail. These pay stubs are printed on paper and include the same information as an electronic pay stub.
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What information is provided on a pay stub?
A pay stub, also known as a payslip, typically includes the following information:
- Employee Information: This section includes the employee's name, address, and sometimes their employee ID number.
- Pay Period: The start and end date of the pay period for which the employee is being paid.
- Earnings: This section shows the employee's gross pay, which is their total earnings before deductions are taken out, for the pay period. This may include regular hours worked, overtime pay, bonuses, and other types of compensation.
- Taxes: This section shows the various taxes that have been withheld from the employee's gross pay, such as federal, state, and local income tax, Social Security tax, and Medicare tax.
- Deductions: This section shows any other deductions that have been taken out of the employee's gross pay, such as contributions to a retirement plan, health insurance premiums, or garnishments.
- Net Pay: This is the employee's take-home pay, which is calculated by subtracting all of the taxes and deductions from their gross pay.
- The number of hours: Highlights the total hours worked during the period.
In the United States, pay stubs also include the Employer Identification Number (EIN), Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN).
Is a pay stub the same as a paycheck?
No, a pay stub is not the same as a paycheck. A paycheck is an actual payment that an employee receives from their employer, typically in the form of a physical check or direct deposit to their bank account. A pay stub, on the other hand, is a document that outlines the details of the employee's earnings and deductions for a specific pay period. The pay stub may accompany the paycheck or be provided separately, depending on the employer's policies.
What are pay stubs used for?
You might be wondering what to do with a pay stub. Pay stubs serve several important purposes for both employers and employees. Here are some of the key uses of pay stubs:
- Record-keeping: Pay stubs provide a record of an employee's earnings and deductions for each pay period, which can be helpful for both the employee and the employer for record-keeping purposes.
- Tax Purposes: Pay stubs provide detailed information about an employee's earnings and deductions, which can be used to calculate and file taxes accurately.
- Verification of Employment: Pay stubs can be used to verify an employee's employment and income, which may be required for various purposes such as applying for a loan or a lease agreement.
- Understanding of Earnings and Deductions: Pay stubs help employees understand the breakdown of their earnings and deductions for a specific pay period, which can help them better understand their finances and plan accordingly.
For Loan Processes: Pay stubs can be used as proof of income when applying for a loan. Lenders use pay stubs to verify an individual's employment status and to calculate their debt-to-income ratio (DTI).
Are employers required to provide pay stubs?
Many countries require employers to provide pay stubs or some form of wage statement to their employees. Here are a few examples of US states where employers do not offer employees pay stubs and have no requirements to do so:
- South Dakota
According to the Fair Labor Standards Act (FLSA), employers are required need to keep payroll records for each employee for at least 3 years. Sometimes, the US Department of Labor may choose to inspect, hence, the information used to calculate the wages should be stored for two years.
How can Skuad help you process global payments seamlessly?
At Skuad, we simplify cross-border payments and benefits for you. On our unified platform, you can manage payroll for full-time employees and global contractor payments easily. Pay in 100+ currencies, generate pay stubs and invoices and get built-in compliance laws regarding pay stubs, no matter where you hire. Talk to our experts to know more.
By partnering with an Employer of Record platform like Skuad, you can hire, pay and manage your globally-distributed teams with ease.