What is a pay stub?

A pay stub is a document provided to employees with each paycheck detailing gross wages, deductions, taxes withheld, and net pay for the current period and year to date. For professional service firms, pay stubs fulfill legal requirements and help employees understand their compensation.

Key characteristics

• Details of each paycheck

• Shows gross and net pay

• Lists all deductions

• Includes year-to-date totals

• Required in most states

• Provided electronically or in paper form

Why it matters for professional service firms

Pay stubs provide transparency and documentation for employees. State laws often mandate specific information be included. Professional service firms must provide compliant pay stubs with each payment, whether through payroll software or manual preparation.

Real-world example

Michelle's pay stubs included: gross wages, federal withholding, state withholding, Social Security, Medicare, health insurance, 401 (k), other deductions, and net pay, both current period and year to date. Employees accessed stubs through the payroll portal. When the employee questioned withholding, the pay stub provided clear documentation of the calculation components.