There are eleven states in the union that don’t require employers to give pay stubs to their employees. This is pretty insane when you consider that 96% of American workers get paid with direct deposit.
This means there are people who have no record of how much they get paid other than what is deposited into their bank account!
Without an employee pay stub, how do they even know their paycheck is correct?
Fortunately, there are many ways you can generate a pay stub for your employees. You can even create one yourself if you don’t want to bring in any outside help. Read on if you would like to learn how.
Why Your Employees Need A Pay Stub
Even if your state does not require you to provide employees with a pay stub, you should still create them. Not only is it important for your own personal records, but it’s also important for them.
An employee may need a pay stub for any of the following reasons:
- Track important deductions like taxes and 401(k) contributions;
- See how many hours they worked;
- Estimate sick leave hours and vacation hours to plan work outages;
- Apply for a loan; and
- Fill out financial aid forms for their child’s college education.
You could attempt to write a pay stub by hand, but this would get cumbersome quickly.
Additionally, while it may be good enough for record-keeping, it will do nothing for employees who need to apply for a loan. Banks won’t accept handwritten statements.
How To Create Your Own Pay Stubs For Free
If you don’t want to use a payroll service to pay your employees or generate pay stubs, you can always make your own.
There are a couple of options for doing so. You can create your own template using word processing or spreadsheet creation software or use a check stub maker found online.
Once you have your template, you will have to fill the template out for each of your employees every pay cycle.
Information To Include On Each Employee Pay Stub
While every employee pay stub is a little different, much of the basic details remains the same. In fact, most of your employee’s pay stubs will look very similar.
The top of every pay stub needs to include at least your company’s name and address. It’s also good to include other contact details like your phone number and email address.
Many employers choose to add their Employer Identification Number (EIN) as well. This gives employees the ability to file taxes without a W-2 if you can’t get it to them in time.
Employee information also needs to be at the top of each pay stub near your company’s information. At a minimum, include their full name, address, and social security number.
This gives your employees a chance to review the information you have on file and check it for accuracy.
Pay Period And Check Date
Federal law indicates you must pay employees on a consistent schedule. Most states also have strict rules about how often an employee gets paid and when.
For example, Iowa law says employees must get paid at least once a month on a predictable pay schedule. Iowa also stipulates you must pay employees within 12 days from the end of the period an employee worked.
You should include both the pay period and the check date on every pay stub. This is proof you paid your employees on time in accordance with federal and state laws.
Check Number and Bank Information
The check number and bank information are for record-keeping more than anything. They are still important pieces of information to include.
What if your employee’s check gets direct deposited into the wrong account? Having a quick reference to the details you need to locate that check could make a huge difference.
Gross pay is an employee’s total wages before anything gets deducted from their check. It’s the one number all other numbers on the pay stub get based on. Every employee needs to know their gross pay to make sure everything else on the pay stub is correct.
Hours Worked and Pay Rates
Regular hours refers to the number of hours an employee worked up to 40 hours. Anything over 40 hours is overtime pay and needs to get listed separately.
The pay rate is how much money an employee gets for each hour worked. Like the number of hours worked, regular and overtime pay rates need individual listings.
A pay stub needs this information because it’s how gross pay gets calculated.
Mandatory and Voluntary Deductions
Deductions are any amounts of money you withhold from an employee’s paycheck. Some deductions, like taxes and garnishments, are mandatory. Other deductions, like 401(k) contributions are voluntary.
Every employee has a right to know why money gets withheld from their check and how much. This is why you must itemize each deduction for them on their pay stub.
The net pay is how much money your employee takes home after deductions. This is how much you write the check for when you pay your employees. You can also use this figure to ensure your employee’s get paid the correct amount.
Gross pay minus deductions should always equal net pay.
As the employer, it’s important you sign every employee pay stub. This signature serves to authenticate the document if an employee needs to use it to verify their income.
HR Future Staff Writer