What Should a Pay Stub Look Like?

Last updated November 27, 2024

Most people who have received a paycheck know what a paycheck stub looks like; however, not everyone knows the details that should be included on a pay stub. When you become an employer, it becomes more important to understand what a pay stub should look like.

Keep reading to discover what a payslip should look like and how to properly read one.

What exactly is a pay stub?

A pay stub is part of a paycheck that lists details about an employee’s pay, such as taxes and other deduction options taken out of the employee’s earnings. How often you administer pay stubs to your employees depends on your pay cycle.

For example, if you choose to pay your employees bi-weekly, you will be administering pay stubs every two weeks, which would be 26 a year. Employees should receive a pay stub with each paycheck.

Create Your Pay Stub

There is no one way that pay stubs should look. Pay stubs from different companies often have different looks. In terms of the physical aspect of pay stubs, there are generally two types:

Physical Pay Stubs

Although many companies are turning to software for their payroll needs, there is still some value in creating physical, paper pay stubs. Not everyone has access to a home computer, meaning not everyone would be able to access their pay stubs in a time of need, such as for proof of income when completing a rental application.

Electronic Pay Stubs

Electronic or paperless pay stubs are becoming the standard, and they provide a variety of benefits to both small businesses and their employees. Unlike paper pay stubs, electronic pay stubs are an environmentally friendly option. Plus, depending on the number of employees you have, electronic check stubs may cost you less to produce per pay period. There are multiple payroll services and software that you can choose from to help create electronic pay stubs.

There is no federal regulation on pay stubs, but each state has its own laws about providing pay stubs for employees, so you will want to review state laws to ensure that your business complies by issuing pay stubs. However, it is important to note that some states require employers to offer paper checks as a payment option or that employees can opt-out of online pay stub delivery.

It is a good idea to give your employees the option of paper or electronic pay stubs, regardless of whether your state requires it or not. Although most employees may prefer to receive their pay stubs electronically, you want to ensure that pay stubs are accessible to all of your employees.

Some pay stubs might be smaller, and some may have their information arranged differently than others. Regardless, as long as they are easy to read, the physical look is not the most important aspect of pay stubs. The priority should be the information that they include.

What information should a pay stub contain?

Pay stubs usually contain the following information:

Payroll cycle
Wages for all employees
Tax withholdings (can be found on an employee’s W-4)
Benefit withholding for each employee

More specifically:

Name of employer and contact information
Employee information (name, address, social security number)
Pay period covered (start and end dates)
Gross wages
Other earnings (vacation pay, bonuses)
List of payroll deductions
Tax withholding (state and federal)
Total deductions
Net earnings
Total paycheck amount
Total year-to-date (YTD) amounts (gross, net, federal tax, and voluntary deductions)

As you can see, pay stubs show a large amount of important information. Employees should always keep their most recent pay stubs as proof of income, as it confirms their gross income and how often that they get paid.

Pay stubs should always match the information contained in an employee’s W-2 form, used to file personal tax returns.

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) and the amount that will be deposited into their account.

To calculate net pay, you must subtract withholdings from the employee’s gross pay. Net pay is the amount that each employee receives at the end of each pay period, based on the payment schedule.

Deductions

Tax deductions are a crucial part of an employee’s pay stub and may make up the most lines. Deductions found on pay 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 voluntary 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 that employers contribute to may also appear on an employee’s pay stub, including the employer’s contribution to the employee’s benefits or the employer’s portion of FICA tax.

Deductions and allowances may include:

Federal taxes: A portion of an employee’s wages withheld for federal income taxes, which is calculated based on filing status, allowances, and earnings.
Local taxes: Deductions for city, county, or school district taxes, applicable based on where the employee works or lives.
Social Security: A mandatory deduction that funds the federal Social Security program, providing retirement and disability benefits.
Medicare: A required deduction to support the Medicare program, ensuring healthcare coverage for individuals aged 65 and older or those with specific disabilities.
Workers’ Compensation Contribution: An employer-provided deduction (in some states) that supports insurance coverage for employees injured on the job.
401(k) Contribution: Voluntary deductions toward an employee’s retirement savings plan, which may include employer matching contributions.

Creating Pay Stubs

Employers need to know how to properly create a paystub to accurately pay their employees on time and avoid any discrepancies in pay. You can use Excel to create spreadsheets for your pay stubs, but this process is often tedious and prone to errors.

Inaccurate pay stubs may hurt your employees, and continuously incorrect pay stubs may cause them to lose trust in you as an employer. If prolonged, it may cause trouble when tax season comes along.

FormPros can help you easily create pay stubs that are accurate and easy for your employees to read. FromPros will not only help your business generate pay stubs, but you can also create W-4 forms, W-2 forms, 1099-NEC for contractors, and more. Using FormPros saves you time and helps you grow your business.