You need to be absolutely sure you are being compliant when it comes to making a check stub. This is because you can face legal issues with your employees and the tax department in the long run.
You not only need to make sure that you have correctly calculated how much your employees should be paid. You also need to make sure all of the individual pieces of information are present on the stub.
So, let’s dive in and have a look at how to create a check stub.
What’s Included on a Check Stub?
There is no single answer to this question. The truth is that there are different regulations in each state which will determine what you have to put down on the pay stub. So, you need to check out the individual regulations in your state.
As an example, in California, the Labor Code Section 226 requires that the following information be included on a check stub:
- Name and contact details of the employer
- Employee’s name
- Employee’s social security number
- Pay rate(s)
- Pay period
- Earnings made under different pay rates (e.g. normal rate and overtime rate)
- Gross earnings
- Net earnings
When providing all of this information, it is very important that you make the correct calculations. This is the crucial part of any check stub.
If you make the wrong calculations and accidentally pay your employees less than they are owed, you can be in serious trouble. Not only can the employee bring a civil case against you, but the tax department may choose to fine you as well. This is important no matter what state you live in.
Opt-In or Opt-Out
You also need to check whether the state you operate in is an ‘opt-in’ or ‘’opt-out’ state. These terms mean that your employee either does or does not have the right to refuse you changing the way you deliver their check stubs.
For example, you may wish to change to electronic stubs. If you change your check stub method without asking your employees, you can also get in serious trouble.
How to Create a Check Stub
The best way to make a check stub properly is to use a check stub maker or a check stub generator. The way that these work is that you add the information to a check stub template and the software makes all of the calculations for you.
A good piece of software will use a real check stub template that is correct for your state. Doing this, you will be safe knowing you have provided all the right information in your jurisdiction and that your calculations are correct.
Check Stubs are Serious Business
Now you know exactly how to create a check stub, but that doesn’t mean you don’t need to worry. At the end of the day, you are the sole person responsible for creating the right check stubs for your employees.
So, don’t take chances — use a proper stub generator and make sure it uses the right information and makes calculations correctly.
If you’ve found this information useful, why not check out some of our other great articles on business and tech solutions?