Pay stubs are an important part of your working life as an employee, as important as receiving the money you are due to be paid. There are a number of reasons why your pay stub is important and why you should request them if you do not receive one from your employer. We have gathered some information together regarding pay stubs for you to help you to understand why they are important.
What is a Pay Stub?
A pay stub is the record of your earnings. The exact information it will show will depend on your employer and the state in which you work, as legal requirements can differ. The basics that your pay stub will show are your pay, salary information, and deductions.
You should receive a pay stub from your employer for each pay period that they pay you. This will be generated by your HR department or the company finance department, depending on the company setup.
A pay stub is an essential document if you ever need proof of income and will also be invaluable when you file your taxes, more on this further down. So, if, for any reason, your employer does not automatically provide you with a pay stub, we recommend you ask for one early and file them somewhere safe.
Who Provides Your Pay Stubs
Your employer should provide you with a pay stub as it is part of their business obligations and should be an integral part of their HR policies. However, some employers are not the best with their paperwork, so may need a push to make sure you receive a pay stub.
There are a number of ways to receive your pay stub and a number of formats that it may be in, so do not worry if it changes from one job to another. Some companies provide a paper pay stub, completed by hand and either delivered in the mail or given to you in the office. Alternatively, you may receive a printed pay stub by either of the same methods. Finally, you may receive an online copy of your pay stub either through an online HR system or via email.
No matter which way you receive your pay stub, it is important that you do receive one each pay period. You should also always review your pay stub to ensure the information included is correct. If you find an error on any of your pay stubs, you should immediately notify your employer to have a correction issued.
Why a Pay Stub is important
As we have covered above, your pay stub is your record of your salary, net pay, and deductions for every pay period with the company. This can be important for a number of reasons, so we recommend you keep your pay stubs in a secure place. Pay stubs can be used as proof of income, so if you are ever disposing of old pay stubs, we advise you to shred them so they cannot be used by anyone else in an identity theft situation.
Proof of income can be a requirement of any large purchase or when buying a home or making a rental agreement, and for all of these reasons, it is common to be asked for multiple pay stubs covering a period of several months. Having a comprehensive filing system for your home financial information is our best recommendation. There are several examples online of the best way to organize your financial paperwork.
The other main reason to check and keep your pay stubs is to help you to file your taxes each year. When filing your taxes, you need to be as exact as you possibly can be, and pay stubs are an easy way to provide exact information. When filing your taxes, the deductions included on the pay stubs from your employer, in addition to the income, are useful to check if you are due rebates.
Pay stubs are also important when changing jobs especially during the financial year, but can be used by your new employer at any time to verify your work history. A verifiable work history is essential and can make the employment process much quicker and the transition into a new job easier to set up. This can be the difference between a job offer in some cases. However, it will also make the first payroll period quicker and mean less chance of errors in a new company as they have something to refer to when setting up your payroll.
How to check your Pay Stub
Due to pay stubs varying by state and by the company you work for, there is no one answer to this question. However, the main thing we have noticed when looking at various pay stubs is that they are full of abbreviations. Abbreviations, while helpful for fitting more information onto the pay stub, can make it more difficult to digest the information if you are new to reading them or when starting work for a new company.
Some abbreviations will be easy to decipher, but we recommend looking up or discussing with your employer any that you are unsure of. It is also just as important to highlight missing deductions as it is to highlight deductions that should not be on there. If a deduction has been missed off, it will likely be picked up at a later date, meaning a higher deduction in the future.
If, after reading the information above, you are wondering how to get a pay stub, your first point of contact should be your employer. We recommend contacting the HR department first to ensure your contact information is all up to date and there have been no issues with getting the pay stub out to you. If after speaking to the HR department you are no further forward, finance is your next step. If there is no HR or finance department, in the case of a small or new business, then go directly to the person who completes payroll.
Disclaimer: This content does not necessarily represent the views of IWB.