When it comes to running a successful business, there are a number of factors that come into play that need special attention. Pay stubs are known by various names in different companies. Some call it a paycheck, whereas others know it as a salary statement, and still there are some who refer to it as a payslip. Regardless of how you name it, a pay stub’s function remains the same – it is a detailed record of your employee’s salary during each period. It is most useful for them to declare income sources while making huge purchases like a house or to get a loan from the bank. Pay stubs are also often requested at their new job as proof to ensure that they have indeed been getting the said income for the past few months.
So what exactly makes your employee’s payslip so critical in areas of taxation and job switches? Its importance lies in the details, and that is what we are here to explore. While a pay stub carries a lot of useful information about their income, there are four important details that absolutely must be present on that piece of paper.
1. Personal Information
Everything from your employee’s full name to their social security number (SSN) needs to be present on the paystub. Are they apprehensive about listing their complete SSN on the slip? Quite understandable! This is the reason why the Internal Revenue Service (IRS) has recently allowed the use of truncated SSN (last 4 digits) on salary statements. It should also include your (employer) name and your commercial and/or residential address.
2. Gross Salary
Most of the employees tend to directly glance at the net pay, the in-hand salary, or the amount that actually gets credited into their account. They completely ignore the gross pay section, one that contains all the important details. If your company’s accounting team is using an automated paystub creator for the statement, then it is bound to have the gross salary section. Here, your employees can see how much taxes have been cut and what other deductions have been made that constitute their net pay. Other contributions like pension funds, health insurance, travel allowances, etc. can also be found in this section.
3. Tax Withholding
You don’t want your employees to end up paying more taxes than what is necessary. Ask them to check the number and the amount of taxes that are withheld for the government, and let them calculate the exact value of any possible rebates that may be coming their way. A pay stub is filled by another employee after all, and humans may make mistakes sometimes.
4. Net Payment
We have finally arrived at the most interesting part of a payslip, the main reason why your employees so eagerly anticipate their stubs – the net payment. Who doesn’t love to keep staring at the sum that gets credited into their account every month? The net pay is, essentially, their gross salary stripped off of all the taxes, deductions, insurances, investments, etc. It constitutes the amount that they can use to spend whenever they feel like it.
There are many other technical details that are included in a pay stub, but the aforementioned four are absolute must-haves. If even one of those isn’t present on any of the slips, then encourage your employees to approach the accountant or the human resources personnel immediately and request a new statement.