What is a pay stub? Definition, components, and how to make one

Payroll is more than just sending employees their wages. It’s also about giving them visibility into how their pay is calculated, which is where pay stubs — also known as pay statements or paycheck stubs — come in.

These documents serve as an important financial record, helping employees track their income and ensuring employers maintain transparency in payroll processes.

As a result, understanding them is essential for both employees and employers. For instance, some US states require businesses to provide them, while others do not.

In this article, we’ll break down what a pay stub is, its key components, and how to create one, whether manually or with online tools. So let’s jump straight in.

What is a pay stub?

A pay stub is a document that gives a detailed breakdown of an employee’s pay (for a specific pay period).

Specifically, it breaks down the employee’s:

• Gross wages
• Hours worked
• Deductions (such as payroll taxes or benefits)
• Net pay (the final amount received)

They can be issued in paper form or electronically, depending on your company’s payroll system.

What information does a pay stub include?

While the exact format may vary by employer or state, a detailed pay stub generally includes the following:

• Employee information: Name, address, Social Security number, and employee identification number.
• Employer information: Company name, address, and contact details.
• Pay period: The start and end dates for the wages being paid.
• Gross pay: The total gross wages earned before deductions (hourly rate or salary).
• Hours worked: For hourly employees, this includes regular and overtime hours.
• Payroll deductions: Income taxes (federal, state, and local), FICA taxes (Social Security and Medicare), health insurance premiums, retirement contributions, and garnishments (i.e., court-ordered deductions for child support or student loans).
• Net pay: The take-home pay after deductions.
• Year-to-date totals: Cumulative gross wages, deductions, and net pay.

A well-structured pay stub makes it easy for employees to verify their compensation, and for employers to maintain accurate payroll records.

What are pay stubs used for?

Pay statements may look like straightforward records, but they carry significant importance for both employees and employers. They are essential tools for transparency, financial management, compliance, and payroll accuracy.

Here are the main ways they are used:

1. Employee transparency and trust

Pay statements give your employees a clear view of how their compensation is calculated. By breaking down gross wages, deductions, and net pay, it eliminates uncertainty and provides reassurance that wages are accurate. For hourly workers, the inclusion of hours worked and overtime also ensures that every shift and extra hour is accounted for.

This transparency is one of the simplest but most effective ways to build trust in the employer–employee relationship, reducing payroll-related disputes and strengthening engagement.

2. Personal financial management for employees

Pay statements serve as official proof of income when applying for mortgages, loans, or rental housing, where landlords and lenders often require recent paycheck stubs as evidence of stable earnings.

During tax season, they are also valuable references for verifying annual forms, such as W-2s, and for reconciling deductions and contributions.

On a more practical level, many employees use their pay statements to track consistent take-home pay, making it easier to budget and manage personal finances throughout the year.

3. Compliance and legal protection for employers

For businesses, pay statements provide a layer of compliance and legal security. And in states where detailed pay stubs are legally required, issuing them ensures the company is meeting labor law obligations.

They also act as a defense in case of disputes. If an employee questions whether they were paid correctly, the pay statement provides a detailed record of wages, deductions, and benefits. In addition, they form part of your official payroll records, which are vital during tax audits or labor investigations.

4. Payroll and accounting accuracy

Within payroll administration, pay statements are essential tools for maintaining accuracy. They allow your payroll teams to cross-check calculations for wages, tax withholding, and employer contributions, ensuring consistency across timesheets, employment contracts, and tax filings.

For small and mid-size businesses in particular, having a reliable record of pay periods reduces errors, supports smoother financial reporting, and contributes to better long-term planning.

5. Access for employee requests

Finally, pay statements are commonly requested by employees for a range of purposes beyond the workplace. Workers may need historical pay records to apply for visas or immigration processes, prove income for government benefits, or confirm employment history when changing jobs.

By providing employees with easy access to their pay statements (whether as printed documents or electronic records through a payroll portal), your business not only fulfills these requests more efficiently, but also enhances the overall employee experience.

Is a pay stub the same as a paycheck?

At first glance, these two things might seem interchangeable, but they serve very different purposes.

A paycheck is the actual transfer of wages from the employer to the employee. It may take the form of a paper check, a direct deposit into the employee’s bank account, or another method of payment depending on company policy. Its sole purpose is to deliver the agreed-upon compensation.

A pay stub, on the other hand, is the explanatory document that accompanies that payment, and provides a transparent record of how the employee's final net pay was determined.

In many modern workplaces, employees no longer receive paper paychecks but instead are paid electronically. However, even with direct deposit, employees usually still receive an electronic stub for reference.

Are you required to provide your employees with a pay stub?

This depends heavily on your jurisdiction, with state-specific requirements often varying.

At the federal level, the Department of Labor (DOL) does not require employers to provide pay statements, even though the Fair Labor Standards Act (FLSA) does require employers to keep accurate records of hours worked and wages paid.

In practice, most states have their own requirements, as outlined below:

Access states (states that require pay statements)

In these states, employers must provide employees with access to their pay information, either electronically or in paper form:

• Alaska​
• Arizona​
• Idaho​
• Illinois​
• Indiana​
• Kansas​
• Kentucky​
• Maryland​
• Michigan​
• Missouri​
• Montana​
• Nebraska​
• Nevada​
• New Hampshire​
• New Jersey​
• New York​
• North Dakota​
• Oklahoma​
• Pennsylvania​
• Rhode Island​
• South Carolina​
• Utah​
• Virginia​
• West Virginia​
• Wisconsin​
• Wyoming

Note that you can provide these electronically, but your employees must have the ability to access and print them.

Access/print states (states that require pay statements and must allow printing)

These states require employers to provide written or printed pay statements. Electronic pay stubs are permissible if employees have the capability to print them:​

• California​
• Colorado​
• Connecticut​
• Iowa​
• Maine​
• Massachusetts​
• New Mexico​
• North Carolina​
• Texas​
• Vermont​
• Washington
  
  

Opt-out states (states that allow electronic-only pay statements)

In these states, employers can provide electronic pay statements, but employees have the right to opt out and receive paper pay stubs:​

• Delaware​
• Minnesota​
• Oregon​
  
  

Opt-in states (states that require paper stubs unless employees opt for digital)

In these states, employers must obtain employee consent before providing electronic pay statements. Without consent, paper stubs are mandatory:​

• Hawaii
  
  

States with no pay stub requirements

These states do not mandate employers to provide pay statements to employees:​

• Alabama​
• Arkansas​
• Florida
• Georgia​
• Louisiana​
• Mississippi​
• Ohio​
• South Dakota​
• Tennessee​

Although not required by law in these states, providing stubs is still considered best practice for transparency and record-keeping.

Want to learn more about state-specific hiring and HR requirements? Check out our free US State Explorer tool!

How long must you keep pay stubs?

As mentioned, employers are responsible for maintaining accurate payroll records, which include stubs. And in the US, the FLSA requires employers to keep payroll records for at least three years. This record retention period ensures your business is prepared for audits, employee disputes, or government investigations.

However, some states impose longer retention requirements. For example, California requires payroll records to be kept for four years, while New York recommends six years.

For your employees, it is advisable to keep personal stubs for at least one year (or until they have reconciled their annual tax documents). In some cases, employees may want to keep them longer, particularly if they are applying for loans or immigration processes that require historical proof of income.

For businesses of any size, maintaining secure and organized payroll records is both a compliance requirement and a practical safeguard. Digital payroll systems like Remote make it easier to store and access these records efficiently while reducing the risk of loss or damage.

How to create a pay stub

Creating accurate pay stubs is essential for compliance and employee trust, but the method you use depends on the size of your business and your resources.

Payroll software

The most reliable way for small and mid-size businesses to create stubs is through payroll software. Most modern payroll platforms automatically generate electronic pay stubs with each pay period. These systems reduce human error, ensure compliance with local laws, and provide employees with secure access to their records.

This is undoubtedly the quickest and easiest option, as all deductions and calculations are fully automated in line with state law. This is especially ideal for businesses handling multiple employees. Learn more.

Pay stub generators

For very small businesses or sole proprietors, pay stub generator tools can be a quick way to create pay statements. These tools allow you to input employee information, wages, and deductions to produce a formatted stub.

However, they should be used cautiously. Not all pay stub generators are compliant with local laws, and manual input increases the risk of mistakes. They may be practical for very small teams, but they are not a scalable or long-term solution.

Manual creation

Some businesses still create stubs manually, using spreadsheets or word processing templates. While this may work in the short term, it is highly prone to errors and does not provide the safeguards of automation. Manual stubs also make compliance more difficult, particularly when managing multiple employees across different jurisdictions.

Want to create your own pay statements? Check out our free pay stub template

How Remote can help

A pay stub is an essential payroll document that benefits both employees and employers. While federal law doesn’t require them, many states have stub requirements that employers must follow.

Creating them manually can take up a lot of time and resources, especially if you have multiple employees. That’s why it’s recommended to use an automated, trusted payroll platform like Remote, where we’ll handle everything for you.

To learn more about how it works — and how we can remove all your payroll processing headaches — speak to one of our friendly experts today.