What Should Your Pay Stub Format Look Like?
Did you know that improper pay stub information can result in legal penalties that cut into your business's bottom line? Whether you're a startup that's hiring employees for the first time, or you've been paying your team for years, it's important to stay on top of payroll etiquette.
To help make sure your company's payroll doesn't cost you more money, here's a quick guide of all the information needed for a proper pay stub format.
1. Basic Information for Proper Pay Stub Format
To prepare your pay stub format, take a look at how a standard pay stub looks. First and foremost, you'll need to include the company name and address. Each employee pay stub will list their legal name and the last four digits of their social security number. Pay stubs also help employees and employers keep track of time by listing pay period start and end dates.
2. Wages and Income
Whether your employee is working hourly, by piece, or on a salary, a proper pay stub will list the rate at which they are paid. Furthermore, employees income is documented two ways by payroll. Net income is the actual amount of money that an employee will take home. On the other hand, gross income is the total amount paid to the employee before any taxes or other deductions are taken out.
3. Tax Deductions
Tax deductions are money withheld from an employee's gross income to be set aside for the government. Depending on where your business and employee are located, there may be federal, state, and local taxes withheld at each pay period.
A percentage is also withheld for Social Security and Medicare, which is listed as FICA on a pay stub. The current percentage withheld from employees for FICA is 7.65% of wages. As an employer, you'll also pay a share of this contribution, at the same rate.
4. Other Deductions
Aside from taxes, there are other deductions that will be listed by a payroll company that's using proper pay stub format. These deductions can come from employer-sponsored health insurance plans, pension plans, or 401k or Roth IRAs. Deductions from income can also come from disability insurance or be a result of wage garnishments due to income tax penalties or debt.
5. Year to Date Details
In addition to net income and gross income for the specific pay period, proper format lists totals for the year so far. Be sure to include the employee's year to date gross income and net income on each pay stub. Additionally, you should track the year to date deductions from your employees' income for any of the appropriate categories that we listed above.
You're All Set To Hire!
As you're preparing payroll for your employees, now you know what information you'll need to include to ensure the correct pay stub format. Still wondering about the best platform to do it? We've got your back, get started now!