What Does a Pay Stub Look Like? The Ultimate Guide [2024]

A pay stub is a document that shows the key information on an employee’s pay and deductions. Understanding how to read a pay stub is important so that you know whether you’ve provided all the required information related to your employees’ salaries.

Pay stubs are often filled with abbreviations and tricky terms, so understanding them can get difficult. So, if you’re wondering “what does a pay stub look like?” this ultimate guide will cover everything you need to know about this matter, including why these documents are important and what they need to contain. Keep on reading to find out more!

Key Takeaways

• A paystub is a document that accompanies a paycheck and gives a breakdown of an employee’s earnings.
• The way a pay stub looks will highly depend on the employer and the payroll system they use. However, a basic pay stub will always include the employee’s name, pay period, as well as gross and net pay.
• Pay stubs can be highly beneficial for both employers and employees, as they can be used as proof of income, for tax purposes, and for record keeping.

What is a Pay Stub?

A pay stub (or a paycheck stub) is a document that shows detailed information on an employee’s pay for a specific pay period. It is usually sent in together with the employee’s paycheck and can be issued either physically or electronically.

A pay stub contains information such as:

• Taxes, deductions, and contributions
• Direct deposit information
• Pay period
• Gross pay
• Net pay

Additionally, a pay stub can also include details about different types of deductions that are usually taken automatically from an employee’s pay. These include tax deduction, Social Security contributions, and insurance contributions.

Some paystubs also include information about sick leave, vacation time, or any overtime payments during a specific pay period.

What Does a Pay Stub Look Like?

A pay stub typically includes the following information:

#1. Gross Wages

Gross wages in a pay stub refer to the total amount of money an employee has made in a specific pay period before any deductions or taxes are calculated. This includes the regular pay rate as well as any bonuses or overtime pay.

Gross wages are the first thing you will see in a pay stub, and they can give you a clear insight into how much you’ve earned for a pay period. If your regular pay is around $20/hour and you’ve worked around 40 hours in two weeks, your gross wage would be $800 (40 h x $20). If you managed to earn around 150$ in bonuses, the gross wage would be $950.

It’s important to understand gross wages, as they can be very helpful when it comes to calculating your net pay.

#2. Taxes, Deductions, Contributions

These three elements refer to the amounts taken out of an employee’s gross wage in order to get to their net pay. Let’s clarify each of them:

• Taxes. Payroll taxes represent the amount that is deducted from the paycheck to fund government programs. This includes FID (federal income tax), state income tax, Social Security tax, and Medicare tax. The amount deducted depends on the employee’s income.
• Deductions. Deductions are the amount taken out of the paycheck for health insurance, retirement contributions, and other benefits which can be offered by the employer.
• Contributions. Most employers offer specific retirement plans—such as 401(k)— which can be deducted directly from the employee’s paycheck.

Employees need to understand all the elements mentioned above, as it can help them understand what they are paying for and whether they’re being paid the right amount.

#3. Net Pay

Net pay in a pay stub shows the final amount that an employee gets to keep. This refers to the amount of money after taxes, deductions, and contributions have been taken out of the gross pay.

It’s important to understand net pay because it is essentially the amount of money you will have available to use. For example, if your gross wage is $3,200 and taxes, deductions, and contributions are around $700, your net pay would be $2,500.

Why Are Pay Stubs Important?

Pay stubs are important for both employers and employees, and here’s why:

• They are important for tax purposes. Pay stubs provide the information required for preparing tax returns accurately.
• They make budgeting easier. Pay stubs can help employees budget, as they show how much they’ve earned and how much was deducted.
• They serve as payment receipts. Employers can use pay stubs as proof that they’ve sent an employee their payment.
• They give employees transparency. The breakdown of every single earning and deduction in their pay stub can help employees better understand how their pay is calculated.
• Helps employers with record keeping. Pay stubs can serve as a record of an employee’s entire earnings, which can then be used for tracking vacation time by employers.
• Useful for income verification. A pay stub can be highly useful as proof of income for renting apartments or loan applications.

How to Create Professional Pay Stubs Hassle-Free

A pay stub can be created both professionally and hassle-free thanks to our online paystub generator! It’s quick and easy to use—all you need to do is:

1. Choose a template. There are six templates you can choose from, and they each state the information in a clear and concise manner.
2. Enter the required information. Fill out the “Start here,” “Company Information,” “Employee Information,” and “Earning Statement” sections.
3. Review your final pay stub. Before saving the finished product, review the pay stub preview based on the information you’ve entered.

This is a preview of what a generated pay stub can look like:

Final Thoughts

A paystub is like a financial snapshot of an employee’s earnings for a pay period. It’s a valuable tool that can help employees keep track of their income and make sure that they’re being paid the right amount.

By understanding what a pay stub looks like and what it includes, employees can easily identify issues and make financial decisions based on that. Pay stubs are also helpful for employers to maintain accurate records of their employees' compensations.

We hope this guide has helped you find everything you wanted to know if the question “what does a paystub look like” ever popped into your head! Keep our tips and tricks in mind, and you’ll definitely have no trouble reading a pay stub ever again.