More businesses are going with an electronic pay stub for their employees.
Gone are the days of the paper paycheck or pay stub. With new software that makes it extremely easy to send out pay stubs online, the need for physical record-keeping is all but gone.
If you’re the owner of a small business, looking to switch over to electronic pay stubs, there are a few things that you’ll need to know. In this post, we’re going to help you with what information you need to include on a pay stub.
Just because those old school pay stubs are gone doesn’t mean that you can withhold financial information from your employees. Let us help you figure out what to include and what to leave out. Let’s get started.
What You Need to Include on an Electronic Pay Stub
Using software like PayStubCreator makes it so easy because you can quickly punch in the necessary numbers and generate a pay stub for each employee in minutes. That is, as long as you know what to punch in.
Name, Date, Period
You have to include the employee’s name so that they know that this is, in fact, their pay stub. You’ll position this at the top, along with the pay date and the payment period (weekly, bi-weekly, monthly).
Hours and Gross Pay
Underneath the basic employee info at the top, you’ll display the number of hours that the employee worked in the pay period and any overtime that they’ve accrued. If they’re on an hourly wage, you’ll display that next to the number of hours and, if they get a bonus for overtime, whatever the overtime wage is.
The gross pay is how much the employee earned before withholdings. To get that number, multiply the number of hours worked by their wages. If they’re on salary, this number will be the same every pay period.
Deductions are any of the programs that the employee buys into every pay period. It could be any or all of health, dental, vision, or life benefits. There might also be a pension plan (401k) and FICA contributions.
The tax section will include the federal and state tax withholdings, as well as local taxes if there are any. The amount that is taken off of the gross pay for federal taxes will depend on the tax bracket that the employee is in. Each state sets its own income taxes, which might be a flat rate or bracketed as well.
The net pay is what the employee will see deposited into their account for the pay period. It’s the gross pay with all of the taxes and deductions subtracted from it. You can also display the year to date numbers, showing the employee gross pay, net pay, and deductions for the whole year up until the issuing of that pay stub.
You don’t need to go overboard with information on an electronic pay stub, but include all of what we talked about today. It’s important to give your employees this information so that they can prepare for tax season, but it’s also important for your records.
Start using an online pay stub system today and do away with all of that extra paperwork that you don’t need.
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