When you pay your employees each pay period, you’re compensating them for the time they worked, whether they’re exempt or hourly employees.
But if your employees just get a check or a direct deposit, all they see is their net pay—and they might have questions as to how you got to that number. For example, how much of their pay was taken out for income tax? How many hours were they compensated for in the pay period? Or how much have they been compensated this year?
That’s where a pay stub comes in. Pay stubs give your employees key insights into their gross pay—and what deductions are being taken out of their checks each pay period.
But what, exactly, is a pay stub? What information does it give your employees? And as a small business owner, are you required to give your employees a pay stub with each paycheck or direct deposit?
What Is A Pay Stub?
A paycheck stub (or pay stub for short) is a paycheck attachment that goes into the details of an employee’s current pay as well as their YTD amount. If you give your employees physical checks, the paper pay stub is an actual attachment to their paper check. If you pay your team electronically, their paycheck stub would be digital. Here's a paycheck stub example, automatically generated by the Hourly app:

Pay stubs help your employees get a better sense of their compensation, including their rate of pay, gross earnings (both per pay period and YTD amount), and any deductions that are being taken out of their pay, like income tax and employee benefits. They can also help employees with proof of income when needed, like for a car loan or to lease an apartment. And, if you provide your team with an online pay stub, they won't need to ask you every time they need to show that proof of income.
What Information Do You Need To Include On A Pay Stub?
Paycheck stubs offer insights into a few key areas of employee pay, including:
General Information
Pay stubs typically include information on both the employee (including name, address, and social security number) and the employer (including company name and address). If you're using a payroll app—like Hourly—employee information would be easily accessible elsewhere for the worker to view and amend if needed. Typically, this information would be gathered before an employee starts or on their first day.
Gross Wages
Your employee’s gross wages (sometimes referred to as gross income) are their pre-tax wages. This is the total amount your employee has earned before any federal income tax, state income tax and other deductions are removed from their pay.
If you have hourly workers, their gross wages are calculated by multiplying their hourly rate by the number of hours worked in any given pay period. So, for example, if you have an employee that has a $20 hourly rate and they work 80 hours in a pay period, their gross wages would be $1600 ($20 x 80). Don't forget to include any overtime hours in this calculation.
If you have exempt or salaried employees, you would calculate their gross wages by dividing their salary by the number of pay periods per year. So, for example, if you have an employee with a salary of $52,000 and you pay them weekly, their gross wages per pay period would be $1000 ($52,000 / 52).
When it comes to gross wages, pay stubs should include at least the following minimum information (though your state law may require more):
- Gross pay for both the individual pay period and YTD earnings
- Hours worked
- Regular pay rate
- Additional earnings (including overtime pay)
- Accrued time off (including sick time and vacation time)
Deductions
Gross pay is how much your employees earned—but that’s not how much they take home each pay period. There are a variety of deductions that come out of your employee’s pay, and those deductions need to be itemized on their pay stubs, and you—the employer— are in charge of withholding taxes.
Deductions that should be included on an employee’s pay stub include:
- Income and payroll tax deductions (including federal tax, state tax withholdings, and local taxes that fund things like unemployment and disability insurance, Social Security, Medicare, and other critical services)
- Deductions for employee benefits (for example, health insurance, health savings accounts, life insurance or contributions to retirement savings)
- Voluntary deductions (for example, charitable contributions)
- Involuntary deductions/Wage garnishments (for example, court-ordered child support payments)
Just like gross wages, information on deductions should be included for both the individual pay period and year-to-date.
Employer Contributions
As an employer, you’re required to make certain contributions on behalf of your employee (for example, the employer portion of the FICA tax, also known as Federal Insurance Contributions Act). You may also make additional employer contributions, like contributing to insurance premiums or your employee’s retirement or savings plan.
While these contributions aren’t deducted from your employee’s wages, they are can still included on the employee’s pay stub.
Again, employer contributions should be listed for both the individual pay period and the total contributions for year-to-date.
Net Pay
In the end, all the information on a pay stub leads to one key number—the employee’s net pay or take-home pay, which is how much money they’re actually bringing home on payday. Paycheck stubs include both the net pay for the given pay period and the YTD net pay. While many employees elect to use direct deposit, it's critical you provide them with a record of the amount of money sent to their bank accounts for each paycheck.
Are You Required To Provide Pay Stubs For Your Employees?
Clearly, pay stubs provide a host of helpful information to your employees. But are you required to provide them?
The Fair Labor Standards Act (also known as the FLSA) requires business owners to track their employees’ hours, but how they track that time is ultimately up to them. But while pay stubs aren’t mandated under federal law, they are required by the majority of states—including California.
So, if you’re operating a business in California, you need to provide your employees with an itemized pay stub for every pay period worked. But even if pay stubs weren’t a requirement, as a business owner, they provide some serious benefits.
When you issue pay stubs through your payroll service every pay period, you can easily track your employees’ hours, pay, taxes, and deductions. By keeping your finger on the pulse of your employees gross wages and net pay, you can more quickly spot any mistakes or discrepancies and correct them before you run into any issues—with your employees, your benefit partners, or the IRS.
Automate The Pay Stub Process With Hourly
Issuing pay stubs to your employees is a must. But manually tracking all the information you need to include on pay stubs is a time-consuming hassle. With Hourly, there’s no need to worry about keeping track of employee hours or deductions. Our app automatically tracks wages, hours, and deductions, allowing you to issue accurate, up-to-date pay stubs with a few simple clicks.
Ready to simplify your payroll process? Get started with a free trial of Hourly today!
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe