Pay Stubs 101: What to Include

Pay stubs are a vital resource for employers and employees alike. Almost every employee in America receives a pay stub in some form, which lets them know how much they’re actually earning, or their so-called ‘take-home pay’.

As an employer, you are not required by law in most states to provide a payroll stub with every paycheck. However, according to the Fair Labor Standards Act, the law does require you to provide some form of written pay statement and to keep track of all of the hours each of your employees work.

Employees need their pay stubs to apply for loans, structure their taxes, and plan their household finances. Therefore, it is vital that you know exactly what to include in a pay stub so that both you and your workers are covered.

Include Hours Worked on Pay Stubs 

As mentioned, a paycheck stub must include the hours that your employee has worked with a given period (usually two or four weeks). You can use a as and when you need to.

This is the one thing that you are definitely legally required to do, so this is arguably the most important part for employers to know.

You must accurately include how many hours they have worked and what their gross pay is for each hour.

Your Employee’s Gross Pay

After this, the next step is to include the gross pay your employee has earned in the given period.

This is the total amount before any deductions such as tax or health insurance.

This is to help your employee and yourself understand how much money is going to the state and other necessary areas.

All Taxes Withheld from Pay

The next step is, of course, taxes. Paycheck pay stubs should always include all of the taxes being taken from an employee’s wages.

This will naturally vary significantly depending on where you are and you and your employee’s situation.

You will need to include federal taxes, state income taxes, and local taxes, which are common in places such as New York City. The amount will depend on the employee’s tax bracket.

Retirement Contributions 

Next up, you’ll need to include pension or retirement deductions into a paystub.

This is usually only necessary if you or your company offers some kind of retirement plan for workers. This could be a 401(k) or a pension.

A certain percentage of the gross salary will be taken every month to put towards their retirement plan.

Insurance Deductions 

You will also be responsible for including insurance deductions on your employee’s pay stubs. This includes any and all employee benefits, such as health, dental, disability or life insurance.

There will also be a space for FICA deductions. This stands for the Federal Insurance Contributions Act and covers areas such as Medicare and Medicaid.

Remember the Net Pay

Of course, don’t forget to actually include your employee’s net pay on the document. When asking “what is a pay stub”, consider that it is first and foremost a resource for employees.

Neglecting to include how much cash they actually get to take home with them would make the pay stub much less helpful, so remember to put this at the bottom of the stub.