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Understanding Pay Stubs

With the technology advancements in electronic employee management software many companies have migrated to online pay stubs instead of mailing or handing out paper pay stubs. They may email a pay stub notification to each employee or have a secure log on set up for each employee to sign on and view their pay stub at their own time.

The electronic capabilities benefit companies and employees for a number of reasons. Companies save money on paper and mailing expenses, the software stream lines payroll, benefits, and compensation processes reducing chance of error, and it keeps information centralized for easy research or editing. On the other hand, it reduces the amount of mail and paperwork that employees receive, it gives them the capability of accessing their paycheck at any online location, and it makes researching or gathering payroll information much easier.

Since electronic employee management software has made it easier to obtain and view pay stubs, it gives us all the more reason to be sure we understand what we are looking at. Important financial, tax, and benefit information that we should all pay attention to is listed.

Pay Stub layouts vary from company to company but they will all include the following…

Personal Information – This includes the company name, employee name, address, and possibly the employee social security number.

Important Dates – Dates listed will include the pay period start and end date, and the date of the check or pay stub issuance. Some sections also include a Year-to-date column to show how much you were paid, how much was withheld, or how much was deducted so far that year.

Taxable Earnings – This is the amount of income that is earned for the specific pay period.

Net Pay – This is the amount of income received for “take home” after all necessary withholdings. This will match the amount of your physical pay check or direct deposit pay.

Federal Tax – This is an income tax withholding that every employee pays. The percentage withheld depends on the amount of income you make and the information you listed on your W-4.

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