5 Pay Stub Mistakes All Businesses Must Avoid

Payroll processing is an important business function that must be performed with care. Making errors can turn out to expensive for the reputation of the business and create sticky situations during audits and surveys.

Common Check Stub Errors

We have listed the most frequent errors made in payroll processing that can prove expensive for the company. It is wise to check for these mistakes or avail of the services of a financial expert or wage-attorney.

1. Missing employer information

A correct and complete proof of income must include the employer’s name and full address. Many companies tend to miss this crucial detail; some check stub generator may skip it in their offered templates. This eventually creates problems for employees who use these payslips to apply to loans and other credit facilities. Another common error is to miss out on including the employer’s legal name. This could be different from the name under which it operates in a certain business environment.

2. Errors related to pay period

A frequent error in payroll stubs online or offline is skipping the total hours an employee worked in a pay period. It is essential to include this detail to ensure that hourly rates are being met. Further, the stub must also state the start- and end-date of the corresponding pay period.

3. Missing employee-related details

Along with ensuring that the employer’s details are complete, a payslip must also incorporate all necessary details for the employee. This includes the complete name and Social Security number (the last four digits). Some slips may use an employee identification number in place of or in addition to the Social Security number.

Tip: All critical details must be added not only to the payslip but also to the wage statement. This will ensure that the employee has important records even after depositing the check in the bank.

4. Forgetting to keep copies

It is ideal to maintain copies of any check stub handed out to employees. These are required during tax season as well as any audits that may get conducted from time to time. If a company uses digital pay stubs, this storage becomes easier. For instance, when you use StubCheck.com to generate stubs, the records get sent to the required e-mail address. A copy is thus automatically created in your inbox, available to print out whenever required.

5. Lack of clarity in extra payments

From time to time, employees may receive additional payments in the form of overtime compensation or a bonus. Some may get commissions based on their targets, say in sales-based roles. The proof of income must enlist such payments clearly. Listing them in a haphazard manner or forgetting to include them altogether is a costly mistake. While this facility may not be available in a free check stub maker, you can use an enhanced stub template to avoid making this error.

A smart way to ensure that no errors creep into payroll processing is to conduct routine audits from time to time. These can be led by the HR team, the finance department or be outsourced to an external agency.