As a small business owner, you can foster trust with your team by ensuring that your employees can access pay stubs with accurate information about the current pay period. The information contained within a pay statement is subject to federal and state employment recordkeeping laws. The IRS requires employment tax records to be saved for four years after filing fourth-quarter taxes for the year. Under the Fair Labor Standards Act (FLSA), employers must retain payroll records for three years and save documentation showing how they determined wages for two years. If a state has different requirements than the federal government, employers must abide by whichever length of recordkeeping is https://www.riramiri.com/fifo-vs-lifo-definitions-examples-differences/ greater. The stub is something the employee can use to confirm what funds were withheld from the gross pay that led to the final net pay amount.
Risks of Using Fake Pay Stubs
The amount of earnings or deductions from a payroll year’s start. Understanding shortcuts also gives you full control over taxes and deductions. Saray is the Head of Human Resources at Connecteam, where she leads a team of HR specialists. She has a diverse background in recruiting and HR management and deeply understands the unique challenges presented to high-growth companies.
Federal Income Tax Withholding
- That makes it way easier to plan your spending, keep up with bills, and avoid that “where did my paycheck go?
- An employee’s gross wages may also vary depending on whether they are paid weekly, biweekly, semimonthly, or monthly.
- For example, an employee might contribute to insurance premiums or retirement plans.
- A pay stub, also known as a paycheck stub, pay slip, or payment stub, is a document issued with each payroll cycle that itemizes how an employee’s wages are calculated.
- It is important to check with your state’s paycheck requirements to assess whether you must prepare a printed or digital copy of your employees’ pay stubs.
- Or, if you are on someone else’s healthcare plan, you won’t have any health plan deductions on your pay stub.
They work the same as paper pay stubs for proof of income and record keeping. You can usually find your pay stubs in your employer’s online payroll portal. Some employers email pay stubs or give you a paper copy with your paycheck. You need to manage payroll documentation if you have meaning of pay stub employees. Accurate pay stubs help you and your team stay compliant with labor laws. A payroll service provider issues payments and generates pay stubs for you.
What Is a Pay Stub? Quick Facts for Employers
Sometimes, the amount of federal income tax deducted from your earnings may be too high or too low. This could be due to a job change or the birth of a child, for instance. If your circumstances change, then you should inform the IRS or your company’s human resources (HR) department as soon as possible. If you have paid too much tax, they will calculate the amount you are due and pay you a refund. While the above elements are all commonly found on paystubs, they may vary depending on your personal circumstances.
Hiring managers and payroll Oil And Gas Accounting management teams use customizable sample pay stub templates to record employee details. It is proof of payment by the employer and comes in handy for financial recording and bookkeeping processes. Organizations also use it for tax compliance and other regulations. They have a clear outline of different components of the salary structure, including tax deductions.
- The reporting period is the time an employee has worked and for which they’re being paid.
- The pay stub itemizes taxes so that employees can see all the tax amounts withheld from their gross pay.
- Include both the pay period net pay and year-to-date net pay on the check stub.
- Try Xero accounting software for free and see how easy payroll management can be.
- Gross pay is the amount on which taxes and other deductions are based.