Why Are Companies Using Digital Pay Stubs?
Every pay period, a business pays its staff in order to reimburse them for the time they spent working.
However, if workers just receive a check or a direct deposit, all they will see is their net compensation, which may raise doubts about how the company arrived at that figure. How much, for instance, was deducted from their wages for income tax purposes? What number of hours throughout the pay period were they paid for? Alternatively, what compensation have they received this year?
A pay stub can help in this situation. Employees can get valuable knowledge about their gross pay and the deductions that are made from their checks each pay period by consulting their pay stubs.
But what precisely is a pay stub? What information does it provide to employees? Is it mandatory for you as a business owner to provide your employees with a pay stub with each payment or direct deposit? Is there any advantage for your company in providing pay stubs to employees?
What Exactly Is a Pay Stub?
A pay stub is a financial document that employees get with each payment. Employees used to cash a paper paycheck, which was tied to a paper “stub” detailing the breakdown of hours worked, earnings, deductions, and taxes before digital banking. Paper pay stubs are far from gone; many businesses still use paper checks, and even with direct deposit, many new workers will receive their first payment on paper, complete with a true, old-fashioned paper pay stub.
Employers must transmit pay stub information so employees may examine the breakdown of each paycheck, whether on paper or in a PDF.
Is it vital for companies to offer pay stubs to their employees?
Because most states require corporations to provide frequent real check stubs to employees, the most likely response is YES!
Why do companies use digital pay stubs? Is it beneficial to your business to provide pay stubs to employees?
- Saving time. It might take a lot of time to complete payroll, but it is a crucial responsibility for the human resources (HR) department of a company. Distribution of pay stubs to all workers and handling of different grievances fall within the purview of the HR department every week or month. The HR department may focus on duties with a greater value added by digitizing pay stubs in order to eliminate the relatively laborious operation of stuffing envelopes and distributing them. In order to automate the delivery of pay stubs, HR has converted pay stubs to digital format. As a result, employees now receive notifications when their pay stubs are online. In addition to all of his prior pay stubs, he may then consult it. Thus, the HR division is relieved of the need to waste time printing pay stubs and responding to constant requests.
- Costs of production and delivery are reduced. Postage and transportation costs are significantly reduced because pay stubs are provided electronically. Employee pay stubs are all distributed electronically. The firm no longer has to provide paper slips because of pay stub digitization software. A pay stub will never be sent or hand delivered again.
- No more errors. Pay stub creation takes just a few minutes, but it may assist to avoid a variety of time-consuming (and expensive) hassles including pay inequities and lost records. Imagine how simple it is for the typical company owner as even seasoned financial accountants make mistakes when calculating items like retirement contributions and tax withholdings! It’s best to get a pay stub perfect the first time because minor errors and oversights can lead to expensive adjustments in the future.
- Pay stubs can help the company to prepare for Tax Season. Tax payments are simple with pay stubs. Law requires small firms to give W-2 forms to their staff members. Each employee’s earnings for the prior year are listed on their W-2 documents. Additionally, they get employer Social Security and Medicare contributions. Assembling W-2 forms is simple if your company furnishes and keeps track of paystubs. Your business will save money & time if the documentation is prepared, enabling you to concentrate on other payroll-related concerns and business expansion.
- In case an audit is conducted, businesses must be ready. This procedure is made simpler by pay stubs. The Fair Labor Standards Act mandates that companies maintain records of the wages paid to each employee, and they make sure that they do. A company won’t need to make alternative records to comply with the Fair Labor Standards Act if it keeps track of its employees’ pay stubs. Having paystubs implies that the company has records that they may go to right away if they need to double-check financial difficulties. Without pay stubs, it may take much longer to sift through all of their records to resolve documentation issues.
- Paystubs boost employee confidence in employers. Employees have greater trust in their companies because they pay stubs. Providing pay stubs to employees shows that the business is a trustworthy entity with accurate records. Additionally, it demonstrates that the company is aware of its obligations to its workers. Employee loyalty and productivity are both increased when they feel trusted by a company. Pay Stubs are seen by many business owners as little more than an annoyance. Pay Stubs are seen favorably by employees but not by employers, according to many employers. But for businesses in a variety of industries, well-kept pay stubs are a useful data source.
Anyone who runs a successful business understands the need of closely monitoring costs and revenues, but do you also pay close attention to staff compensation? Employees are the heart of any company, thus they will go above and beyond to ensure that your payroll is accurate and up to par with a fully itemized pay stub.