Are you trying to get the answer to “What are paystubs?” Read this article to learn what is included in pay stubs and what you need to have.
Do you and your employees know the answer to the question, “what are paystubs”? If not, your company’s retention rates could suffer.
Every year, American businesses lose $1 trillion, because of voluntary turn over rates. When an employee doesn’t understand how their pay works, they’ll begin to look for work elsewhere, even if they loved being on your team.
Don’t allow your business to lose good team members, just because of confusion surrounding pay. Read on to learn what you and your employees need to know about paystubs.
What Are Paystubs?
To answer the question, “what are paystubs?”, let’s start by looking at the information they include. The exact information your paystub will include varies by state. However, most paystubs will include the following information:
- Deductions
- Taxes
- Contributions
- Total wages earned
- Net pay
A paystub is the part of the paycheck that includes all the details about the employee’s pay. You’ll itemize the wages on the paystub for that particular pay period. The year to date payroll information will also be on the paystub.
All About Taxes
Your employee’s paystubs will include tax information for their federal and state tax withholdings. It’s a good idea to invest in a paystub creator, to help you make sure you’re applying the right tax deductions. Let’s look at how federal and state tax deductions are different, and what you need to know about them.
Federal Taxes
The Federal tax withholding will vary depending on your employee’s specific tax bracket. The amount each employee pays relates directly to the amount of income they earn on an annual basis.
State Taxes
Certain states will work with a bracketed tax rate system that’s similar to the Federal one. Yet, other states don’t use a graduated income scale to determine how much to tax each employee. Instead, a flat rate is set, and all employees have to pay the same amount of state taxes.
Gross Wages Versus Net Pay
The way you calculate gross pay will vary depending on the way you pay your employees. Hourly employees can calculate their gross wages by multiplying their hourly rate times the hours they worked. However, if you have a salaried employee, they’ll need to calculate their gross wages by dividing their annual salary by each pay period.
Calculating Net Pay
After subtracting each deduction from the employee’s check, you’re left with their net pay. The net pay is the money that the employee gets to take home each pay period. It’s up to you whether you want your employees to receive their net pay in the form of a physical check, or as a direct deposit.
Educating Employees
Understanding the answer to the question, “what are paystubs”, means you can be a better employer. The more you know and understand about your employee’s payroll, the easier it’ll be for you to guide them and your company to success.
Yet, just understanding how to paystubs work, won’t be enough. You also need to take the time to educate your employees as a group about how to read their paystubs.
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