Running a small business can be incredibly rewarding, but it also comes with many challenges – especially when you’re in the growth stage. As managers expand operations and bring on more staff, keeping track of the company payroll can become increasingly difficult.
Paystubs are frequently regarded as a nuisance by employers. This is because, other than helping employees to keep track of payments, paystubs do not appear to give many benefits to firms. Paystubs, on the other hand, might have a beneficial influence on your business.
When employers distribute checks, they provide paystubs. Paystubs, also known as pay slips, are distributed at the conclusion of each pay period to reflect how much an employee earned during the preceding pay period. They also include any benefits deductions made by the employer.
Physical paystubs are typically attached to cheques. If your organization accepts online payments, you may issue pay stubs electronically via an employee portal so that your employees have digital copies.
Thankfully, there’s an easy way to keep on top of costs and employee compensation, and that is through the use of pay stubs. In fact, pay stubs (or payslips) are vital both to the companies and the people who work for them, and here’s why:
Saving employers time and money:
Keeping track of employee salaries and compiling financial records takes up a lot of time, and hiring an accountant to do it for you is anything but cheap. Pay stubs work to make the process simpler and faster, and they can be used by just about anyone. They’re extremely easy to understand and even easier to fill out, covering everything you need to manage employee salaries on a single document.
Pay Stubs Are Beneficial During Tax Season
Paystubs make it easy to pay taxes. Small businesses need by law to provide W-2 forms to their employees. W-2 papers document each employee’s earnings for the previous year. These forms also represent the various sorts of payments made to employees, such as internet payments or cheques for more than $600. They also get employer contributions to Medicare and Social Security.
When your employer provides and keeps track of paystubs, assembling W-2 forms becomes easy. Having documentation ready will save your firm time, allowing you to focus on other payroll issues and company growth.
Small Business Audits are no Myth:
The more a small business grows, the more attention they’re going to attract from the taxman. A future-proofed business should therefore prepare for their inevitable financial and accounting audit as early as possible, and this means keeping a close record of employee pay. Using a pay stub template makes this process easier and more effective, helping employers to avoid fines that are incurred for discrepancies found by the authorities.
Small businesses need preparation for the potential of an audit. Paystubs make the process go more smoothly. They verify that you have records of payment to each employee, as required by the Fair Labor Standards Act.
Keeping records of employees’ pay stubs eliminates the need for a company to establish substitute documents in order to comply with the Fair Labor Standards Act.
Using an accounting system to track your company’s money does not always provide enough security. Paystubs enable businesses to demonstrate excellent practices. Having them on hand will make audits go more easily and safeguard your firm from auditing issues.
Having records that you can immediately access saves your firm time. Paystubs are useful when dealing with an employment issue or keeping records. When you have paystubs, you have documents that you can examine right away when you need to double-check financial difficulties. Without paystubs, it may take much longer to sift through all of your records to resolve documentation issues.
No more mistakes:
Creating pay stubs takes so little time, and yet, they can help to avoid a number of time-consuming (and costly) ordeals like compensation disparities and missing records. Even experienced financial accountants make mistakes when calculating things like retirement contributions and tax withholdings, so imagine how easy it is for the average small business owner! Small mistakes and oversights can result in costly fixes down the line, so it’s a good idea to get it right the first time with a pay stub.
Employees need them:
People use pay stubs for all sorts of reasons in their day-to-day lives. For example, a staff member who was applying for a loan for a new house would almost certainly need to prove their income to be considered eligible. A pay stub makes that possible – and straightforward! Pay stubs can also be used by employees to keep track of tax contributions and deductions, helping them to live more financially responsible lives. As a result, a well-informed and financially compliant team is likely to improve productivity both inside and outside the office.
Paystubs are required for employees to make large purchases
Employees require pay stubs to qualify for a variety of financial operations. For example, evidence of work is required when applying for loans and renting or purchasing a home. As a result, bankers, lenders, and landlords regard paystubs as the gold standard of proof that a potential buyer is able to pay them.
Your firm can frequently create a letter attesting to employment. However, as compared to a paystub, this may not always be adequate. Writing letters also consumes valuable time that your company should be spending on more vital duties.
Employees require pay stubs in order to keep track of their finances
Every small business needs to keep track of their finances. Employees can also use pay stubs to keep track of their hours and remuneration. This employee paperwork may save you time and make payment issues easier to resolve; employees may refer to their stubs if they think the firm did not properly recompense them for services.
Give it a shot:
If you’re still unsure why small businesses use pay stubs or whether or not they’re appropriate for your company, why not give it a trial run to see how things play out? Any good business person knows to keep a close eye on expenses and profits, but are you giving the same level of attention to employee salaries? Employees are the backbone of any business, so many make sure your payroll is watertight and fit for purpose with a fully itemized pay stub.