Employers often view paystubs as an annoyance. This is because paystubs seem not to provide many benefits to businesses outside of allowing employees to keep track of payments. However, issuing paystubs can have a positive impact on your company.
Employers issue paystubs when they give out checks. Paystubs, also called pay slips, go out at the end of each pay period to show how much an employee has earned over the previous pay period. They also reflect any benefits deductions made for them by the employer.
Physical paystubs usually come attached to checks. However, if your company makes online payments, you may issue pay stubs electronically via an employee portal for your employees to have digital copies.
1. Paystubs Help During Tax Season
Paystubs make paying taxes easier. Companies have a legal obligation to issue employees W-2 forms. W-2 forms record each employee’s earnings over the prior year. These forms also reflect the different types of payments paid to employees, including online payments or checks that exceed 600 dollars. They also have employer payments to Medicare and Social Security.
When your company issues and keeps track of paystubs, it’s easier to assemble W-2 forms. Having documentation ready will save your business time, which will allow you to direct your focus to other payroll matters and company growth.
2. Paystubs Help Businesses to Track Expenses
Tracking expenses is a good idea for every business. Monitoring money coming in and out makes it possible for companies to know when to lower or increase spending.
Assessing a Lack of Financial Gains
If you find that your company has not made the financial gains you hoped for, you will want to examine your records. Having paystubs will make it much easier to do this. Through your paystubs, you might find an increase in employee payments, or bonuses, which would explain the discrepancies in your gains.
Having well-maintained paystubs as records could allow you to eliminate employee payments as a source of your company’s monetary losses. Either way, having paystubs will enable you to save time by analyzing financial records faster.
Assessing the Rate of Growth
Paystubs also allow you to assess business growth. If you want to know how well your company is doing, the paystubs are one item you can look at. In addition, they will tell you how many employees you have and their employment history.
You can compare the employee expenses to the overall income of your business. Information like this will help you determine how well your business does monetarily.
Businesses can also use paystubs to track the hiring rate and dates of hiring to assess how fast growth occurs.
3. Employees Need Paystubs
Employees need paystubs for a variety of items. For example, the proof of employment that paystubs offer allows employees to make large financial purchases. Paystubs also enable employees to track their finances.
Employees Need Paystubs to Make Large Purchases
Employees need pay stubs to qualify for many different financial transactions. For example, applying for loans and renting or buying a house requires proof of employment. As a result, bankers, lenders, and landlords consider paystubs the gold standard of evidence that a potential buyer can pay them.
Often, your company can generate a letter attesting to employment. However, this may not always prove sufficient compared to a paystub. Writing letters also take up valuable time your business could spend on other important tasks.
Employees Need Paystubs to Track Their Finances
Paystubs also allow employees to keep track of their hours and payment. This employee documentation may save you time and make payment disputes easier to settle; employees can refer to their stubs if they believe that the company failed to reimburse them correctly for services.
4. Issuing Paystubs Boosts Confidence in Employers
Paystubs also give employees more faith in their employers. Giving employees paystubs demonstrates that you are a responsible employer who keeps good records. In addition, it shows that you have an awareness of your responsibilities towards your employees. When employees trust a business, they are more likely to stay longer and perform tasks more efficiently.
Many business owners believe that paystubs are little more than an inconvenience. Employers often believe that paystubs benefit employees but do not benefit companies. However, well-maintained paystubs make up a valuable data source for companies in various areas. In addition to offering employees benefits, paystubs can save businesses time.
5. Auditing
Businesses have to prepare for the possibility of auditing. Paystubs help this process to flow smoothly. They ensure that you have records of payment to each employee, which the Fair Labor Standards Act requires.
Keeping records of employees’ stubs means that a business won’t have to create alternate records to comply with the Fair Labor Standards Act.
Using an accounting system to track your business’s finances does not always offer enough security. Paystubs allow companies to present evidence of good practices. Having these available will allow auditing to proceed more smoothly and protect your company from any auditing discrepancies.
Having records, you can pull up quickly saves your company time. So whether you’re dealing with an employment dispute or compiling records, paystubs help.
Having paystubs means that you have records you can look at immediately when you need to double-check financial issues. Without paystubs, it might take a lot longer to go through all of your documents to settle problems with documentation.
Final Thoughts
When you keep files on employee and expense history, this speeds up many business processes. Using paystubs allows your business to focus on more important matters. Paystubs save your business time, and time is money.
If you need help to generate pay stubs for your business, PayStubCreator can help you with their online service. You can create paystubs without paying a subscription, and you don’t have to download any software. All you need to do is fill out your employee information, and they will generate a professional paystub that you can download and print.
