The amount you receive as pay isn't the sole important part of your paycheck. The stub has other valuable information that you need to understand and hold on to.On your next pay date, don't dismiss your payroll statement after you verify the amount of pay.The information on your paystub serves you in many ways. If you're trying to purchase a home, it acts as proof of income. When you need to establish credit, you can use it to obtain a credit card.When it's time to file taxes, the additional information helps you get a jump start while waiting on your W-2.It's important to understand what payroll statements mean and what they're used for. We can help. Find out five must-know payroll statement facts right here.
- A Payroll Statement Reflects Your Gross Wages
If you're on an employer's payroll you receive a paycheck once a week or every two weeks. When you work freelance, you likely print your income stubs with a
Paystub Creator.Either way, the stub you receive reflects your gross wages.Your gross wage is what you earn to the hour before deductions. For example, if you make $8/hour and work 40 hours, your gross pay averages out to $320.You if work on salary, then your
annual salary gets broken down into 12 months of payments. With freelance pay, you get your gross upfront, then handle deductions later.
- Net Pay
Some employees confuse gross pay with net pay or they don't understand the concept altogether.It can look like your employer cheated you when you look at your net pay, but they haven't. Net pay is what's leftover after deductions come out of your gross pay. It's your actual take-home pay.The pay statement you receive documents your current net pay and year-to-date.
- Rate of Pay
The rate of pay is how much an employer agrees to pay you for time worked. You may get paid hourly or annually.A good pay statement lists a current rate of pay. If you worked for a period of two weeks, the statement reflects what's due for those days.
- Hours Worked
If you work by the hour, your paycheck reflects how many hours you've worked in a pay period. Employers can set their own pay schedules, but on average, they're weekly, bi-weekly, and monthly.When you work any hours over your scheduled time—overtime or double-time—that info gets listed as well.Exempt (salaried) employees may also have the hours they've worked disclosed.
- Deductions
Unless you live in a country that requires no taxes and insurances, expect deductions.In the US, the state you live in and the IRS has a right to tax your gross pay. Expect to see FICA—contributions to social security and medicare—and federal and state income taxes.Also, expect deductions like health insurance and retirement contributions. All of these takeaways affect your pay.
Know Your StatementKnowing what's on your payroll statement keeps you informed about what's owed to you.If also documents where a certain percentage of your gross pay goes. Don't throw away your help. File your stub away for later use.Are you interested in getting more leads for your freelance company? Check out our lead generation service and build a bigger client list.
