The Importance of Keeping Your Pay Stubs
Perhaps you have on occasion asked yourself, is there any reason to keep old pay stubs? Both employers and employees should retain their pay stubs. A pay stub contains a range of important tax and financial information. For workers, this information can be used to help them verify their income, pay their taxes, and ensure that they are being compensated fairly for their work. For business owners, pay stubs can be even more important. In some jurisdictions, companies are legally required to create and keep pay stubs for a certain period of time. As a business owner, you should only be asking how long to keep pay stubs, not whether you should keep them.
In addition to making filing and keeping paystubs easy, there are many advantages to making your pay stubs online. Pay stub software is a cost effective and efficient tool.
At Check Stub Maker, we understand the importance of professional pay stubs that are easy to document and keep. If you are looking to get pay stubs made today, you can use our innovative software to create and print your check stubs instantly! Never worry about how long to keep pay stubs again, as you can archive your digital files indefinitely, ditching the dozens of paper files.
Pay Stubs Contain Very Important Information
A pay stub is a document with a wide range of important information, tax, financial, and otherwise. On a typical check stub, you will find the following:
- Identifying Information: Among other things, this includes the name of the employee, the name of the employer, and the specific dates covered by the pay period.
- Gross Wages: The worker’s total amount of earnings during the specified pay period.
- Taxes/Deductions: This is key. A professional pay stub should include a full accounting for where all employee earnings went, including the taxes paid and deductions that were taken out of the paycheck.
- Net Pay: Finally, a pay stub should clearly state exactly how much the employee took home in ‘net pay’ or ‘take home pay’.
Why Business Owners Need to Keep Pay Stubs
For employers, keeping well organized financial records is critically important. To start, businesses need to ensure that they are always in full compliance with the law. There are many state and federal labor laws that might be implicated. In the instance of how long to keep pay stubs, the Equal Employment Opportunity Commission (EEOC) notes that many companies are required to keep employee records.
In the event that your company is facing a regulatory investigation, or if it is facing a complaint from an employee, you will want clear, easily accessible payroll records. In addition, well-organized payroll records can also make it easy to complete certain basic business tasks. When tax season rolls around, it will be far easier for your company to get everything done if all financial statements and records are organized and on file. This is especially important for small businesses, as these companies may not have the resources available to hire a person to do payroll on a full-time basis.
Why Employees Should Keep Their Pay Stubs
Individual workers should also retain their pay stubs. For employees, check stubs are important for a few different reasons. An extremely common reason to keep old pay stubs? Income verification. While a few statements will work, a pay stub is the most common source of income verification. If you are applying for a loan or line of credit with a bank, or you have been asked to produce your pay stub to verify your salary during an employment negotiation, you will want quick access to your pay statements. Further, pay stubs help you track your taxes and deductions. You should know exactly where all of your money is going at all times.
How Long Should You Keep Your Pay Stubs?
How long you should keep your pay stubs or not differs according to whether you are an employer or employee. Here is how long to keep pay stubs in each instance.
Employers should be very cautious when it comes to holding onto financial records of employees. You need to make sure that your company is following all relevant federal, state, and local labor regulations. With the Fair Labor Standards Act (FLSA) in mind, companies should keep payroll statements for at least three years. It is always better to be safe with record keeping. Your organization can keep these records longer than the three years, but it helps file management if you have a determined date at which you will shred the statements. And like any important financial statement, you should always shred pay stubs. Simply throwing them away puts you and your employees’ sensitive financial information at risk.
One of the great things about digital pay stubs is that they are very easy to store and sort through. Unlike printed financial documents, there’s no need to wonder how long to keep pay stubs. You can keep this information safe – indefinitely – without clogging up your workplace.
As an employee, can you shred your pay stubs? As a general rule, American workers should keep their pay stubs for at least one year. You should not shred your old pay stubs until you have received your W-2 form for the year. Once you receive your W-2, you can use your old paycheck stubs to verify that all of your tax return forms are correct. After you have paid your income taxes, and received your tax refund (if you are owed one), you will generally not need to keep your paycheck stubs any longer. While you can certainly keep them for your own records, you can also feel comfortable disposing of them.
Create Your Digital Pay Stubs Instantly
With Check Stub Maker, you have the ability to instantly create pay stubs with ease. Our expertly crafted check templates allow for automatic calculations. In a matter of minutes, you can preview, purchase, and print your professional check stubs. We offer a full money back guarantee. If for any reason you are not satisfied, please do not hesitate to reach out to our live customer support team for help.