Understanding pay stubs can be confusing. Refer to this helpful guide to make sense of them!
Below we see a pay stub from GoCo. Check out this help article for step-by-step instructions to access your pay stubs.
Let's look at the key parts of a paystub:
- Pay Period & Pay Date: The pay period are the dates covered by the pay stub, indicating the timeframe for which the employee is being paid. The pay date is the date that this paycheck is being issued.
- Employee Gross Earnings: This section lists the various types of earnings the employee has received during the pay period. Common items include:
- Gross Pay: The total amount of money earned before any deductions.
- Regular Hours: The number of hours worked at the regular rate of pay.
- Overtime Hours: The number of hours worked beyond regular hours, typically paid at a higher rate.
- Bonuses or Commissions: Any additional payments beyond regular wages.
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- Employee Taxes Withheld: Employee taxes are a portion of an employee's earnings that the employer withholds to cover taxes owed by the employee. These taxes are mandated by federal, state, and sometimes local governments and are subtracted from the employee's gross pay before they receive their net pay.
- Employee Deductions: Employee deductions are the deductions taken from an employee's gross pay to determine their net pay. These deductions cover expenses or contributions withheld by the employer from the employee's wages.
- Employer Contributions: Employer contributions are the financial contributions made by an employer on behalf of their employees towards different benefits or programs. These contributions are separate from an employee's gross pay and are usually included as part of the overall compensation package. Examples of employer contributions can involve:
- Retirement Plans
- Health Insurance
- Life Insurance and Disability Insurance
- Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
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Net Pay: The final amount the employee receives after all deductions have been taken from their gross pay. Net Pay = [Total Pay] - [Taxes Withheld] - [Deductions]
Test your knowledge!
Can you figure out the total cost to the company based on the following paycheck amounts?
Total Pay: $5,000
Employee Taxes: $1,232.50
Deductions: $400
Net Pay: $3,367.50
Employer Taxes: $382.50
Employer Contributions: $350
Answer:
All right! Here's the breakdown:
Total Cost to Company = Total Pay + Employer Taxes + Employer Contributions
Total Cost to Company = $5,000 + $382.50 + $350
Total Cost to Company = $5,732.50
So, the total cost to the company for this paycheck is $5,732.50.
Did you get it right?
If you have any other questions, please reach out to our Payroll Specialist team at embeddedpayroll@goco.io if you utilize our Embedded Payroll with Gusto or help@goco.io.
Disclaimer: Information provided in this material is not all-inclusive and is for educational purposes only; it does not constitute legal advice.
Published 5.23.24