Different Types of Check Stubs
Many people don’t receive their checkstubs or pay stubs in paper form anymore. Electronic check stubs are the norm, but they may not be the best type of check stub in all cases. Employers should consider their options carefully. They should also assess the needs of their employees when choosing between different types of paystubs.
What is a Check Stub?
A check stub is part of a paycheck that lists details about an employee’s pay, such as taxes and other deductions taken out of the employee’s earnings. It refers to the various formats and types of pay stubs used by businesses.
A check stub shows wages earned for that specific pay period (current pay period), as well as year-to-date amounts (YTD). Deductions also appear on an employee’s pay stub. In the end, the pay stub reveals the employee’s actual take-home pay (net pay). This is the amount that will be deposited into their account.
If you’re wondering “what are check stubs?”, you’re not alone. Before you start creating pay stubs, you need to have the following information:
- Payroll cycle
- Wages for all employees
- Tax withholdings
- Benefit withholding for each employee
Deductions
You can use W-4 forms to determine your employees’ withholdings and allowances to deduct from each pay period. Deductions that appear on check stubs include:
- Employee tax deductions: These are taxes mandated by government agencies, such as federal income tax, state and local taxes (if applicable), and the employee’s portion of FICA tax.
- Benefits and other deductions: These deductions depend on the extra benefits that the employer provides and what the employee wants to be deducted, such as insurance premiums, retirement plans, or charitable donations.
- Employer contributions: Items contributed from an employer may also appear on an employee’s pay stub, including the employer’s contribution to employee benefits or the portion of FICA tax.
As an employer, you should keep a copy of each employee’s pay stubs for your payroll records. You are responsible for providing a check stub to each employee every pay period. Check stubs help employees ensure that they receive the correct paycheck amount. They also give employers a way to settle discrepancies in an employee’s pay.
There is no federal regulation on pay stubs, but each state has its own laws about providing them to employees. You should review state laws to ensure your business complies. Some states don’t require employers to provide check stubs at all, though it may still be beneficial to do so.
Check stubs can be given in paper form or electronically, depending on the employee’s preference.
Different Types of Check Stubs
There are generally two different options when it comes to creating paystubs:
– Physical Check Stubs –
Although many companies are turning to software for their payroll needs, there may still be some value in creating physical paper check stubs. Not everyone has access to a home computer. This means some employees may struggle to access their pay stubs when needed, such as for proof of income during a rental application.
Having paper pay stubs available is also a great backup for times when technology fails. Depending on the size of your business and the number of employees, paper pay stubs may be more affordable than a payroll software subscription. Unfortunately, paper check stubs are not environmentally friendly. They can also make the payroll process long and tedious if you choose not to use payroll software.
– Electronic Check Stubs –
Electronic or paperless check stubs provide a variety of benefits to both small businesses and their employees. Unlike paper stubs, they are an environmentally friendly option. They may also be more cost-effective, depending on the number of employees you have.
Using paperless payroll allows you to keep all payroll records electronically, avoiding paper clutter. It also enables the use of electronic funds transfer (EFT), allowing you to pay employees quickly and efficiently.
There are multiple payroll services and software programs that can help create online pay stubs. Overall, online check stubs save time, reduce effort, and cut down on paper and printing costs. The main downside is their limited accessibility. Employees without a home computer may struggle to access electronic check stubs when needed.
Some states require employers to offer paper checks as a payment option. In these cases, employees must have the ability to opt out of online check stub delivery. Employees must also consent to receive their W-2 form online. If they do not consent, they must receive a paper copy.
Tips Regarding Pay Stubs
- It is a good idea to give your employees the option of paper or electronic check stubs, regardless of whether your state requires it or not. Most employees may prefer electronic pay stubs, but accessibility should be a priority.
- If paper is your preferred payroll method, you may want to keep electronic records as a backup. In the event of a natural disaster or other emergency, relying on paper copies may make recovery difficult.
- If you’re having trouble creating pay stubs for your employees, enlist the help of an expert to assist with payroll.
Understanding Check Stubs
You should now be able to answer the question “whats a check stub?” Understanding the different types of checkstubs and how they work is important for business owners. This ensures that payroll information remains accurate and up to date. By understanding check stubs, you can easily solve pay-related issues. It also helps simplify off-boarding and other employee-related tasks.
You can choose to provide paystubs electronically or on paper. However, offering both options ensures that every employee has easy access to their pay stubs.
FormPros can help you easily generate pay stubs and other relevant tax documents. This allows you to keep track of your finances quickly and efficiently.
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