Pay stubs are almost a relic of a bygone era.
Nearly everyone in America gets paid via direct deposit. Survey data from a few years ago that 82
And that number is likely going to go up as digital human resource and payroll systems continue to become more common and more accessible.
But it’s unlikely that the pay stub will disappear completely. Their usefulness in tracking a person’s income guarantees their continued use.
That means that anyone that works — especially anyone that wants to have workers — will need to know how to how to read a pay stub and explain it to others.
Read on for what you need to know about pay stubs.
Why do I care about pay stubs?
Pay stubs create the all-important paper trail that lets workers and employers literally be on the same page about employee compensation.
Pay stubs are almost like historical entries for employee compensations. Other organizations see pay stubs as the go-to way to verify or assess one’s income standing. These include banks, insurance companies, residential leasing facilities, pretty much anywhere you need to prove you make money.
They also go a long way in defraying liability for employers. Also, they are such a basic business practice that not using pay stubs is embarrassing.
If you’re a startup looking to build pay stubs on the quick, go to https://www.thepaystubs.com/ to get started.
Breaking down how to read a pay stub
Pay stubs should break down where all an employee’s money is going.
There are four basic groups of information on pay stubs: identifying information, gross compensation, withholdings and contributions, and time measurements.
Identifying information should include the employee’s name and current address and any other work IDs. The same goes for the employer: name and address at the very least. The pay stub should include payroll information like the check number or transaction number used to identify money moving to the employee’s account.
Gross compensation is usually just hours times hourly wage and accounts for overtime in someway. If the employee is salaried, that info needs to be documented as well. Bonuses are accounted for here as well.
Withholdings are no fun but usually keep you out of trouble. The federal, state, county, city and even special jurisdiction entities have the right to tax your income. Employers help employees make sure their taxes are paid by taking certain amounts of money out of each paycheck and sending it to the government. Deductions often things like health or other insurance that you get through work. It can also include special savings or retirement accounts that aren’t taxed.
Contributions are usually indirect payments from your employer to you for things like splitting health insurance costs or matching 401(K) or 403(B) payments.
Time measures are self-explanatory — each element on a pay stub is impacted by time and should be tracked over time. Pay stubs usually include different dollar amounts for the current pay period and for the running totals for up to that point in the year.
So many more 101 courses needed
Getting a business going is no easy thing. Learning how to read a pay stub helps give insights how.to pay employees and think about how you want to run a business. And if you have a great idea, you need to cut down on getting caught up to speed on how to do business.
Hit up our resources page where we’ve put our brains on how to do business.
