Creating pay stubs for employees is an important part of being a business owner. Keeping accurate and up to date payment information for your employees not only helps you keep track of everything but it’s important if an employee ever asks you for past pay period information.
Employees need access to this information if they want to apply for loans, credit cards, mortgages, car loans, and more. So, set up your company to support this type of bookkeeping. It’s a great policy to follow and important for the morale of your staff.
That said, there are some things that a lot of people don’t know about pay stubs. Here are six interesting facts you may not know.
1. You’re Not Always Required to Provide a Pay Stubs
The general thought is that all employers provide pay stubs but they’re not actually required in every situation. There is no federal law saying that employers need to provide pay stubs so at that point, it becomes the responsibility of the state to determine the requirements.
For example, states like Alabama, Florida, and Ohio do not require you to provide pay stubs to your employees. Certain states like Arizona and Pennsylvania require employers to provide access to payment information but they don’t have to provide any written documentation or paper stub.
States like Colorado and Texas require employers to provide written pay stubs every pay period. If they provide electronic pay stubs for employees then they must provide a way for them to print them out.
2. Gross Wages Consist of Both Total Hours Worked and Pay Rate
So, what is a pay stub? What does it consist of and what information goes on it? Two of the most important pieces of information on a pay stub are the total hours worked and pay rate for the employee. This information will be vital if that employee plans to apply for a loan of any kind. It’ll also be expected for you to provide that data if you’re ever audited. It’s proof of how much you’re paying the employee, how many hours they work, and whether or not you’re required to provide certain benefits.
3. Deductions Might Be Required on Your Pay Stub
The payroll deductions on each employee’s pay stub will vary based on a variety of factors but you may be required to provide this information. Only a traditional pay stub or advanced pay stub will provide this data. If you choose to use a basic pay stub, you won’t have deduction information available on the stub.
4. You Need to Keep Pay Stub Information for at Least Four Years
The IRS required employers to keep records of employment information for at least four years after filing the fourth quarter of that year. It’s best that you follow this requirement because you never know when an ex-employee can come back and request information for whatever reason.