In the US, around 150 million people are employed. Chances are, you're either already working or are preparing to join the many who earn paychecks.
Either way, it can be a good idea to learn about pay stubs, as these are vital pieces of paper for many financial situations and life's milestones.
If you want to understand more about pay stubs, then keep reading. Here's your quick guide to pay stubs.
- What Is a Pay Stub?
A pay stub is a piece of paper that you receive from your employer. It's basically a written record that you work for said employer in a legal fashion.
You can think of your pay stubs as a "receipt" for your paychecks.
- What Can I Use Pay Stubs For?
Because pay stubs are official papers, they essentially prove that you're employed. This can come in handy when you need proof of employment for loans, apartment applications, and more.
- What's on a Pay Stub?
There are several important pieces of information listed out on a pay stub.
First of all, the top will have your information, as well as your employer's. This includes your full name, address, employee number, and the last 4 digits of your Social Security number. For the employer, it'll list their business name and address.
Each pay stub will clearly state what the pay period was. This can be either a week, 2 weeks, or a month.
Pay stubs will also show how many hours you worked and the hourly wage you're earning. If you work different roles at the company, then you'll see your pay stub broken down into different sections for each role.
You'll then see something called gross pay. This is basically your hours worked times your wage. However, this isn't what you're paid out.
This is because you'll have payroll deductions. Things deducted from your gross pay include tax payments, health insurance premiums, and regular contributions to retirement plans.
After all these things are deducted, you'll get what's called your net pay. This is what you take home at the end of the day.
Often, the bottom of your pay stub will also list the vacation time you've accrued, as well as any sick days you've taken.
- What if I'm a Freelancer?
If you're a freelancer, you won't get a pay stub since you're not technically employed. You can give your clients invoices to ensure they pay up, but it's not the same thing as a pay stub.
In this case, you can use a pay stub generator to input your pay details. Not only will this serve as evidence of your freelance work, but it can also help you keep track of clients too.
- Understand Pay Stubs
After reading this article, you should now have a good grasp on pay stubs.
As you can see, these are important pieces of paper that can help you file income taxes, apply for apartments, and apply for loans as well. So make sure you keep good track of your pay stubs and even generate some extra copies on a pay stub creator so you always have a backup.
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