Pay stubs are used by all kinds of employers. Click here for a guide on paycheck stubs to learn everything you need to know with regards to how they work.
Believe it or not, paycheck stubs date back to ancient Mesopotamia!
But what is a paycheck stub? It seems like a silly question, but you'd be surprised at how many people don't know how significant these little pieces of paper are.
Keep reading to find out more.
What Is a Paycheck Stub?
It might seem like there's no need for a paycheck stub in the first place. After all, you know how much you've earned. However, the stub lists the most important aspects of your check.
Stubs typically include information on things like wages earned, which taxes are taken out, deductions made for things like healthcare plans or 401Ks, and so on. It also outlines the specific pay period.
Why Are They Useful?
Paystubs benefit everyone involved: The IRS, the employer, and of course, the employee.
Let's start with how a stub can help employees. First and foremost, since it provides an exact breakdown of wages earned and subtracted during a pay period, it allows employees to have a better sense of their earnings.
Having a stub on hand can also serve as evidence if you spot an error and need to talk to your employer about an adjustment — something 82 million workers have experienced.
Speaking of which, paystubs allow employers to keep track of benefits, hours, and of course, money. While employers aren't legally required to provide a pay stub, a ledger of wages is federally mandated and giving a pay stub is often the easiest way to keep track of such info.
That leads us to Uncle Sam himself and the IRS.
Both employees and their bosses need pay stubs to file taxes accurately. Having tangible proof of earnings can make filing easier and ensure that both parties receive proper compensation.
Who Needs One?
In short, everyone. As mentioned above, having a paycheck is quite beneficial to employers and employees alike.
And that extends to the self-employed, too. Keeping track of wages can be tricky if you receive payments through PayPal, Square, or other electronic transaction services.
Using a pay stub maker might seem like an extra step, but trust us, when it comes time to file your taxes, you'll be thankful you had the info on hand.
Self-employment taxes are a pain, to begin with. But digging through page after page of PayPal info will just make the process even tougher.
Paystub generators are usually free to use, and spending a few minutes of your time upfront can save you hours when tax time rolls around.
Final Thoughts on Paycheck Stubs
So, in conclusion, what is a paycheck stub?
Paycheck stubs might seem like an outdated concept. But as you can see, they still have an important place in today's business world, whether you're working for yourself or someone else.
So before you toss that paycheck stub in the trash, remember what you read today and keep it somewhere safe.
And don't forget to keep checking back with our blog for more helpful financial content.