Top 8 Reasons to Make a Paystub
Pay stubs play an important role in the payroll process. Pay stubs confirm that both the employer and employee agree on a pay structure.
While there is no federal regulation on pay stubs, they are beneficial to both businesses and employees. If you are not generating pay stubs for your employees every pay period, you may end up with unsatisfied employees and be putting your business at risk.
Keep reading to learn the top eight reasons to make a pay stub for your employees and ensure that your small business moves in the right direction.
What is a paystub?
A pay stub is the part of an employee’s paycheck that details the employee’s earnings.
A pay 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) that will be deposited into their account.
Pay stubs also show information such as the number of hours worked, pay period dates, and up-to-date employee information.
Pay stubs include important deductions such as:
- Employee tax withholding and deductions
- Benefits
- Other deductions
- Employer contributions
With or without a pay stub, you must keep track of this information throughout the year. Pay stubs just make it easier.
Reasons to make a pay stub
There are many reasons why you should be generating payroll records for your business. Below, we’ve detailed the top eight reasons to make pay stubs for your employees.
Keep track of your employees
Pay stubs are a great way to keep records of each employee’s pay as they provide all the important details you need. Generating a pay stub can help you keep track of your employees as they provide detailed records of their payment history, deductions, and benefits.
Pay stubs make tax season easier
Although you should keep detailed records of your employees’ earnings at all times, this becomes easier to do if you are administering pay stubs throughout the year. This information is especially important come tax season.
If you generate pay stubs every pay period, it makes completing W-2 forms much easier. W-2 forms detail the income from your employee’s previous year’s employment, and you are legally obligated to provide a W-2 to each of your employees. Keeping pay stubs will make that process much smoother.
Keep track of your expenses
Paying your employees is a large part of your expenses. Pay stubs not only provide detailed records of employee payment history for the benefit of your employees, but they can also benefit your business as well.
If you notice that your expenses have begun to increase, your first step will most likely be reviewing all of your expenses. Detailed pay stubs make this process much faster as they provide you with the exact amount that each employee is currently being paid and has been paid in the past.
For example, when reviewing your expenses for the quarter, you may notice that your expenses were higher than usual. Upon looking back on employee’s pay stubs, you may see that the increased expenses for that month may have been the result of a bonus that you gave one of your employees but that you had forgotten about, eliminating the mystery.
Transparency for your employees and business
Pay stubs give your employees a clear understanding of their earnings at all times. Pay stubs allow your employees to keep track of key information, such as:
- Hours worked
- Gross wages
- Deduction
- Vacation pay.
Pay stubs also hold you as an employer accountable for paying your employees accurately. Pay stub errors may negatively impact your employees, and continuously incorrect pay stubs may cause them to lose trust in you as an employer.
Pay stubs allow employees to ensure that they get the correct paycheck amount and give employers a way to settle discrepancies in an employee’s pay. As mentioned, this transparency also makes tax season that much easier.
Proof of income for your employees
Your employees may have to show proof of income if they are applying for a loan or looking to lease a new apartment, meaning that they may approach you to provide that proof of income in the form of documents.
You can provide your employee with an employment letter, but generating one can be time-consuming if the request comes at a busy time for you or your HR department. It may also be a case that the employee needs an employment letter in a specific time frame, and you can deliver. Plus, many lenders do not consider letters of employment as sufficient proof of income.
If you provide an employee with pay stubs for each paycheck, then they already have proof of income, and no further action would be required from you.
Eco-friendly option to store records
Electronic or paperless pay stubs are beneficial to both small businesses and their employees.
Unlike paper documents, electronic pay stubs are environmentally friendly. Depending on the number of employees you have, electronic pay stubs may even end up costing you less to produce per pay period than paper ones would.
Ensure that your business is growing
Pay stubs are not only for established small businesses. Pay stubs can help ensure the professionalism of any business, no matter the size.
If you’re self-employed or an independent contractor, monitoring the progress and growth of your business can be confusing, especially if you are just starting to work with staff or subcontractors.
If this is the case, you should consider creating pay stubs to help keep track. You don’t need an accountant to do so: designing them online is a quick and easy way to get started. Plus, creating pay stubs will bring your business to the next level of professionalism.
Increased convenience
Electronic pay stubs allow you to keep all payroll records electronically, as well as providing the ability to use electronic funds transfer (EFT) to pay your employees quickly and on time.
There are many payroll services and software that you can choose from to help create electronic pay stubs. With Form Pros, you can quickly generate paper pay stubs for your employees by simply answering a few questions.
Generate pay stubs for your business
There are several reasons to generate pay stubs for your employees to ensure the growth and sustainability of your business.
Form Pros makes generating pay stubs a simple task with our easy-to-use pay stub generator. Form Pros lets you efficiently create pay stubs at the fraction of the cost that an accountant or other payroll service would charge, and it’s quick!