What information is legally required to appear on employment pay stubs?
There’s a good chance that generating a pay stub isn’t front of mind when starting a small business. However, once you begin paying employees, you’ll need to know how to do it.
There are laws surrounding employment pay stubs. To avoid running into an issue, you must include the correct information.
The requirements vary slightly from state to state. However, you must include the items below, regardless of where you operate.
Business and employee information
The first essential piece of information is your business name. This usually goes in the top, left or right-hand corner.
Include your official, registered business name. Under your name, you must include your street address, city, state, and zip code.
Each pay stub also needs the employee’s name and address. Some states require the employee’s social security number along with an employee ID.
When starting out, find a pay stub maker you like and set up a template you can use every time. This makes the process easier and faster.
Every pay stub needs to have income information for each pay period. This will vary depending on whether the employee earns a salary or hourly wage.
It’s important to include both gross and net income. Gross income is how much the employee made before taxes. Net income is what they take home after taxes get deducted.
If an employee has an hourly wage, the pay stub should show the hourly rate. It should also include how many hours they worked for the current pay period.
Don’t forget to add any overtime pay or bonuses to the income section of the pay stub.
Any type of withholding must appear on an employee’s pay stub. The majority of these withholdings include taxes.
Federal income tax, social security, and Medicare are the most common tax withholdings. They’re required for all employees. If you have state income tax where you live, this needs to go on the pay stub as well.
Some cities even require local income taxes. They help pay for certain government services.
Other withholdings are specific to an employee. These may include health insurance and retirement deductions. As a rule, any employee benefits that get withdrawn from their pay need to show up on the pay stub.
Each stub needs to include the current pay period. These are the dates the employee worked to earn the current paycheck.
It’s also important to show the date of issuance for the paycheck. This helps with recordkeeping for you and the employee.
Many employers include the year-to-date amount on the pay stub. This is the total amount the employee has earned for the year up to that point. This allows the employee to keep track of how much they’ve earned, which is beneficial for budgeting purposes.
Create accurate and legal employment pay stubs
As a new business, the last thing you want to deal with is a legal issue due to a pay stub. That’s why it’s important to include all the essential information from the beginning.
Use this list of requirements and generate high-quality employment pay stubs every time.
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