A good understanding of your personal finances is crucial to your success in the business world. This often means familiarizing yourself with the terms. For instance, paychecks and paystubs are used interchangeably all too often. But while they are very similar, there are significant differences between the two, so let’s review paycheck vs paystub.
What is a Paycheck?
Your paycheck is the actual payment you are given. It’s an older term at this point since many forms of payment now come in the form of direct deposit. However, generally speaking, it refers to the actual check you are given when you complete a job. When it was literally a check, it would include the final amount you were owed as payment, after any paycheck deductions. You would then deposit that money in your bank account.
The modern-day equivalent of this would be looking at your bank statement for the direct deposit amount that you were paid for your job.
What is a Paystub?
A paystub contains a variety of information related to your paycheck. The term itself is largely out of date: It used to refer to an additional, tear-away portion of a paycheck that came with a physical paycheck.
It usually starts with the gross pay of your paycheck. This is the actual amount you were paid before any deductions or taxes were taken out. After this, the tax and deductions removed from your check will be listed, resulting in the net pay you received. The net pay on your paystub is the actual amount you receive.
The number of deductions removed from your check varies, depending on your local tax laws. Furthermore, if you have a pension, retirement, or health care plan, there will be additional deductions on your paycheck. These deductions also typically use a variety of codes to represent the different amounts of money that have been removed from your paycheck. You may need to contact your accounting office for an explanation about what these deductions are.
Generating Paystubs for your Business
If you’re a small business owner or independent contractor looking for help generating a paystub, make sure to check out PayStubs 365. We offer easy-to-use paystub generator software that allows your employees and contractors to access their paystubs, understand how to read a paystub, and know what has been deducted from their paychecks.