What is the difference between a paycheck and a pay stub?
Everyone looks for the day when their hard-earned payment is credited to their bank accounts. A paycheck helps in driving employees to continue with the same work again after a long month of constantly grinding at work. This blog will highlight the primary differences between a paycheck and a pay stub.
What is a paycheck?
When payday rolls around, employees eagerly anticipate receiving their hard-earned payments. A paycheck is a physical check given to an employee as compensation for their work. It contains all the necessary payment details, and the employee must deposit or cash it to receive their earnings. Typically, the amount on a paycheck is the agreed-upon salary stated in the employment contract.
A paycheck can also be based on the work an employee has done during a specific time period, which may result in variations in the payment amount. One of the key characteristics of a paycheck maker is not digital and is not given out in paper form or mailed to employees. However, as companies increasingly move towards digital payment methods, receiving a physical paycheck has become an outdated practice.
As it takes a certain amount of time to manually process different paychecks for each employee, the traditional method of payment is gradually becoming less popular. Many companies are now turning to automated payment platforms or other digital payment methods as they are more efficient, and this method is time-saving.
Is any Money Added or Deducted to the Paycheck?
When an employee receives a paycheck, it may have deductions such as taxes or other fees that the company is responsible for informing the employee about. It is the employer’s responsibility to inform the authorities, like the Internal Revenue Service, of any withholdings. The amount included in a paycheck is typically the standard payment agreed upon in the employment contract, but it may also include bonuses, overtime, or other forms of recognition for the employee’s hard work.
What is a Pay stub?
A pay stub is closely associated with a paycheck, and it provides a detailed breakdown of all the items that make up the payment. The only distinguishing factor between a paycheck and a pay stub is that a pay stub can exist both in electronic and physical form, while a paycheck is always a physical document.
A pay stub contains a comprehensive record of all the components that contribute to an employee’s total salary. These records are available both in physical and digital formats. When employees receive their paychecks, they can refer to their pay stubs for a detailed breakdown of their salary. A check stub maker generates an electronic or physical document, and it serves as a record of all the amounts that add up to the employee’s overall salary. There are some of the important details that are included in a pay stub:
- Date of payment
This indicates the date when the check was issued by the company. It is important for employees to confirm that the date is accurate and aligns with their pay period.
The pay stub should contain the accurate addresses of both the employee and the employer. Incorrect or outdated addresses can cause delays or errors in receiving the paycheck.
- Period of payment
This includes the total number of days for which the payment is being issued. It is usually from the first day of the month to the last working day. Any discrepancies in the pay period can affect the accuracy of the payment calculation.
- Rate of pay
The agreed-upon pay rate, as stated in the employee’s offer letter, should be reflected on the pay stub. Any changes in the pay rate should be communicated and agreed upon by both parties.
- Total Payment
The pay stub should show the gross pay, which is the employee’s total earnings before any deductions are taken out, and the net pay, which is the amount received after deductions. In customized online paystubs, you can add deductions such as FICA Medicare tax, FICA Social Security Tax, Federal income tax, and State Tax.
The business’s administrative team should keep track of any changes in an employee’s name, address, and pay rate. This helps to avoid any discrepancies in the payment process. Keeping up-to-date records ensure that employees are compensated correctly for their hard work and dedication to the company.
While a paycheck is the actual physical check that an employee receives as compensation, a pay stub is a detailed record of everything that makes up that compensation. Paystubs provides a software platform to employees so that they can create pay stub online in seconds. Employees should also review their pay stubs to ensure accuracy and to understand how their pay is being calculated.