The relationship between employers and employees relies on transparency and accuracy. Employees are entitled to a detailed breakdown of their income, while employees must keep records for their own internal purposes (i.e., payroll) and to stay compliant with various legal obligations. And that is exactly where pay stubs come into play. They allow for transparency between employer and employee and can provide them both with a clear record of all the financial transactions between them.
In today’s article, we'll explain to you what pay stubs are, why they are important, and what sort of information should be included in them. We’ll also share some free pay stub templates.
What Is a Pay Stub?
A pay stub or paycheck stub is a document that contains all the information about employees’ earnings for a specific pay period. It’s provided by an employer, is generally accompanied by a paycheck or a direct deposit statement, and is usually issued weekly or monthly (based on how often employers pay their employees).
Why Do You Need Pay Stubs?
Whether an employer or employee, pay stubs can be extremely useful tools.
Employers can use pay stubs for:
- Tax purposes;
- Record keeping;
- Staying compliant with federal or state labor laws;
Employees can use pay stubs for:
- Verifying income when applying for loans or mortgages;
- Tax reporting;
- Understanding contributions and deductions;
- Ensuring they were paid correctly;
Pay stubs are a good way to foster a culture of transparency between employers and employees. They ensure both are in full legal compliance, provide a clean and clear pay record, and can contribute to a more positive working relationship and culture.
Now, before we share the free pay stub template, let’s review what sort of information an average pay stub includes.
What to Include in a Pay Stub?
Pay stubs can widely differ based on industry, specific needs of a company and its size, country’s laws, and much more. But, there are some details that are universal for most pay stubs and that every one of them should include:
- Employee details (full name, place of residence, social security number, etc.);
- Details about the employer (name of the company, registered address, etc.);
- Date of the pay period’s start and end;’
- The number of work hours (hourly rate could also be included);
- Any employee benefits or bonuses earned during the same pay period;
- Gross earnings;
- Any deductions (income tax, federal or state tax, etc.)
4 Free Pay Stub Templates
Free Simple Pay Stub Template
Free Pay Stub Template With Paid Time Off
Free Pay Stub Template With Overtime
Free Pay Stub Template With Overtime and Paid Time Off
Error-Free Pay Stubs With My Hours
Downloading a free pay stub template can certainly help you streamline a number of administrative tasks, and lower the amount of time it takes to complete them. And, even though that sounds great, there’s still the pending question of – how to collect accurate data for pay stubs.
With My Hours tracker you can easily collect all the information about your employees' work hours and hourly rates. You can later go through that data and use it to create error-free pay stubs. All you need to do is simply set hourly rates for each member of your team, employee, or for each project. After that, you’ll have a full overview of their work hours and earnings.
Are pay stubs mandatory by law?
The answer to this question will depend on the location of your business, or more specifically, the exact country or state it's located in.
Although in most European countries, pay stubs are required by law, in the US, there are no federal laws that regulate pay stubs. But, there are certain states inside the US that do mandate pay stubs, and some of them even regulate the exact type of pay subs employers are required to give to their employees.
For example, in the state of Hawaii, employers are required to provide paper pay stubs unless they receive explicit permission or a request from their employees to do otherwise.
Is a pay stub the same as a paycheck?
No, a pay stub is not the same as a paycheck. And even though pay stubs can, in some cases, be affixed to paychecks, there are still some key differences between them.
Paychecks normally contain information about net pay, while pay stubs are more detailed and could include:
- Net and gross pay;
- Any deductions;
- The exact number of work hours;
- Hourly rate;
Is there a difference between pay stubs and invoices?
Yes, there are differences between pay stubs and invoices. While invoices also hold information about the payment (method, terms, etc.), they are still not the same as pay stubs.
Invoices are most commonly sent by freelancers or contractors as a means to request payment from their clients. Pay stubs are usually an integral part of the payroll procedure and are sent by companies to their direct employees.