WHAT IS PAYCHECK STUB? 

It has an alternative name as pay advice or paycheck stub or pay stub. It refers to an electronic pay or paper document that provides meticulous information about an employee’s salary for a specific pay period.

All types of companies generated pay slips whether large, medium, or small-scale companies. A pay stub can be handed over physically with the payment in the form of a cheque or cash. In the modern trend, the business owner generally pays their employer through bank transfer then, pay stubs are generally in digital form.

“Generating a pay stub has become a lot easier in modern trends; Thanks to Digitalization”

 It’s just putting the numbers in software and it provides a proper calculation within minutes. Pay Stub provides detailed information about employee pay; Below are some highlighted features of it:

1. Employee Information: Employee Name, address, or Employee Identification Number (EIN), Name and address of the company, and position or title of it.

2. Pay Period: Paying period includes the starting and ending date of earning wages; the payment date is also mentioned  in it.

3. Gross Salary: It’s a sum of earning wages before any deductions and taxes. 

4. Deductions: These are several deductions that are made out of gross salary.  Deductions generally depend upon the rules and regulations of the company. Here are some common types of Deduction:

• Professional Tax: Generally, it’s a fixed amount that is deducted from the employee’s salary and it’s called a state-level tax.       
  
• Provident Fund:  It’s a contribution from both sides; the employer as well as the employee. It’s a certain amount of percentage which is deducted from the employee’s salary.
• ESI (Employee State Insurance): It is a mandatory deduction at a certain level of income and provides medical benefits in case of any illness, disability, mortality, or death. It’s also one of the contributions which are from both sides; employee and employer with a fixed amount of percentage. Recently, the contribution rate of an employee is 0.75% and the employee is 3.25%.
• Other Deductions: These are additional deductions that may include loan repayments, retirement contributions, and House Rent allowance but it depends upon the policy of the company.
  
  

5. Net Pay: it’s an amount that is in the hands of an employee after all deductions from the gross salary.

In Summary, A pay stub is a document in the form of electronic or paper. It shows comprehensive information about the earnings. Through the software, it’s too convenient to maintain a digital record, saves a lot of time, and reduces costs as it cuts the manual processing and printing charges.

Importance of Pay Stub:

A pay stub is an electronic or physical document with detailed information about the employee’s pay including gross earnings, deductions, and Net pay. “Having a Pay Stub is beneficial for employees as well as an employer” Here are some of the advantages of having a pay stub for employees:

1. Income Proof: A Pay Stub is a source of proof of your actual income. It helps for various purposes like mortgages, credit cards, or any Govt. benefits. Moreover, it also helps in employee verification purposes and various financial as well as legal transactions.

2. Filling of Income Tax: A pay stub has a major role while filling tax returns as it contains crucial information like an employee’s gross income, deductions as well as net pay so, it helps to calculate the desired amount of income tax which is payable to the Govt. Having a pay stub throughout the year helps to track taxes whether it’s underpaid or overpaid. If it’s underpaid then it’s needed to pay additional taxes or if it’s overpaid then apply for a refund.

3. Lease or Rent out a property: When an employee applies for Rental property, the landlord requires a pay stub to verify his financial status as they want to know whether the person can pay the amount or not.

4. Salary Negotiation: Having a pay stub, helps to negotiate a salary. if an employee applies to another company, then he has proof of his income which helps to increase the salary of an employer. The other company also requires a pay stub for verification purposes and the actual amount of salary information.

5. Bank Loan: While applying for a loan, the Bank requires a lot of documents and a pay stub as it’s enough proof of an employee’s financial status and determines the ability of the employee to repay the loan amount and a crucial document for loan approval.

Pay stub also helps in other variety of purposes like legal immigration, social security, worker’s compensation, visa application, child care expenses, medical insurance, and budgeting.

There is a variety of reasons to generate a pay stub. Below, have some of the advantages of having a pay stub for the employer:

1. Full-Fledge Record: It provides a comprehensive record of the employee’s pay that includes gross earnings, deductions, and Net pay in a detailed way so, it helps to track the employee’s holidays, Bonus, performance, and attendance. As these factors are kept in mind at the appraisal timing.

2. Legal Rules: For every company, it’s mandatory for legal compliance otherwise, govt may take strict action towards a company like impose of penalties and closing the company. In the pay stub, it’s necessary to comply with labour laws and ensure that all deductions and wages are according to law.

3. Key of Good relation: Pay stub helps to maintain a good relationship between employee and employer as it also affects the overall work culture of the organization. Having detailed information in the pay stub helps in dispute resolution between employer and employee as communication is clear through records.

4. Time and cost Management: All salary information is provided in a single piece of the document so, it saves a lot of time for employers to review earnings, deductions, and employee performance and take their decisions quickly regarding the appraisal, measure the performance of the employee, etc.

5. Satisfaction to the employee: The employee is the key to every business. Every business needs to keep their employee satisfy. Employees feel more secure while seeing their detailed salary in the pay stub and it helps them to focus on the productivity of the company because they ensure about their fair and accurate pay.

Difference between Pay stub and Payroll software

Pay stub and payroll software are two software that serves different meanings with different purposes. Pay Stub software is a tool used to the generating pay stub for employees. In Pay Stub software employers put the employee’s information such as working hours, and pay rates then it generates the whole salary slip in a couple of minutes.

However, Payroll software is a comprehensive system that includes the processing and salary calculation of the employee. It has some of the features as it displays the whole amount of the employee’s net pay, No. of the employer, ESI, EPF, and TDS Deduction. Other features of payroll software are tracking time and attendance, tax calculation, and also the ability to generate pay stubs for each employee.

Payroll and Pay stub software is different in terms of:

1. Elements
2. Benefits.

First, talk about the difference in terms of elements, In the case of Pay Stub:

1. Employer Information: The pay stub software contains the employee’s name and address, displays the name and address of the company, contact information of the employer, and Unique Employer Identification No. (EIN) which has a unique number of nine digits.

2. Gross Pay and Deductions: Generally, the Gross-pay means the total amount earned before withheld deductions. Deductions include provident fund, ESI (Employee State Insurance), professional tax, and other deductions.

Net pay: It’s the amount that employees take home. It’s the net amount of money that is calculated after the deductions from the Gross-Pay.

In the case of Payroll software:

1. Time and attendance tracking: Payroll software tracks the timing of an employee, their leaves, and the attendance of the employer which helps to calculate accurate pay.

2. Paystub Generator: Payroll software generate pay stub automatically for a pay period. Filling the necessary information then, the software automatically calculates the gross salary, the deduction, and the net amount.

3. Conformity of legal Obligations: Payroll software company rules with federal and state. Some of the labour laws included in payroll software such as Minimum Wages Act, provident fund, and miscellaneous act.

Now, talk about the differences in terms of Benefits. In the case of payroll software, here are some of the benefits for both employer and employee:

1. Reduce errors and boost efficiency: Generating pay stubs for every employee is a cumbersome process that requires a lot of time and errors; if it’s done by a human being. On the other hand; automatically generated pay stub for every employee not increases efficiency but also decreases the number of errors. Moreover, pay stubs can be generated in minutes rather than weeks.

2. Holistic HR systems: Payroll software is more useful for HR as payroll comes under the functioning of HR. Through the payroll software, even the Directors and CEO can also understand the payroll process easily. It also helps HR in various functions like monitoring the time and attendance of the employee, Generating the offer letter, etc.

Here are some benefits in the case of pay-stub software:

1. Budget Friendly: Payroll software can’t be afforded by a small company so, for them, a pay stub is the best choice, it helps the company to generate a pay stub which helps to save time and lowers the risk of error.

2. Easy to use: Pay Stub software is user-friendly as compared to payroll software. Pay stub software has an organized layout and a customizable template that can use by any person. It doesn’t require any kind of training but on the other hand, payroll software requires a lot of specialized training.

These are some of the highlights of the difference between payroll and pay-stub software.