September 23, 2025
by Soundarya Jayaraman / September 23, 2025
Running a small business comes with many responsibilities, and managing payroll is one of the most crucial tasks.
But when it comes to pay stubs, are you confident you’re providing your employees with all the essential information?
A pay stub is a document given to an employee that outlines earnings, deductions, and net pay for a specific pay period. It typically includes gross wages, taxes withheld, benefits contributions, and final take-home pay. Employers provide pay stubs to show transparency and verify payment details.
Also known as payslips, pay statements, or wage statements, pay stubs aren’t just a piece of paper. They’re a record of earnings, deductions, and compliance that can protect your business and build trust with your team. You can generate a pay stub on your own using templates or ease the process with payroll software. Employees can receive their pay stubs electronically through direct deposit or in the mail on paper. Sounds difficult? Don't worry.
In this guide, we’ll explain everything you need to know about creating and managing pay stubs and ensuring your business stays organized and compliant.
Disclaimer: The article is purely for informational purposes only and does not constitute legal or tax advice. Pay stub requirements may change, and employers should consult with a qualified attorney, tax advisor, or their state’s Department of Labor to ensure compliance with applicable laws.
Pay stubs are important because they provide proof of income, track deductions, and verify employment. They help employees understand how their wages are calculated and confirm tax withholdings, insurance payments, and retirement contributions. Lenders and government agencies also use pay stubs to assess financial eligibility, and it is often a necessity under law in many states. Pay stubs improve:
A pay stub is there to give employees information about the money they’ve earned for the most recent pay period, whether that be every week, two weeks, or a month. Totals are typically displayed both by that pay period and the year-to-date total.
Essential information includes
We've gone over everything that needs to be included in a pay stub, but it can be difficult to visualize exactly how it's all laid out. Luckily, G2 has a readymade template that is free for you to download and use immediately.
Alternatively, you can also use payroll software to generate pay stubs and take care of payroll tasks easily. To explore your options, check out the best payroll software on G2 and compare platforms based on real user reviews.
While federal law doesn’t require employers to issue pay stubs, most states do. Depending on where you live, the rules can look very different. States generally fall into one of five categories below.
A small number of states have no laws mandating pay stubs at all. If you operate in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, or Tennessee, you aren’t legally required to provide them.
That said, many employers still do so as a best practice to maintain transparency and accurate records.
In most states, employers must make pay stubs available in some form, paper or electronic. This group includes 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, and Wyoming.
The key is that employees must be able to clearly see their earnings, deductions, and hours worked.
Some states allow electronic pay stubs but add an important caveat: employees must also be able to access or print them easily. If you’re in California, Colorado, Connecticut, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, Vermont, or Washington, you’ll need to ensure your digital payroll system includes a straightforward way for employees to download or print their pay statements.
In certain states, employers can default to electronic pay stubs but must give employees the option to “opt out” and request paper instead. This applies in Delaware, Minnesota, and Oregon, where employee choice is built into the law.
Finally, a few states flip the rule: paper pay stubs are the default, and employees must actively consent to receive electronic versions instead. Currently, Hawaii is the only opt-in state.
Since pay stub laws can change, check your state’s Department of Labor website to confirm the latest requirements.
Beyond showing employees their earnings, pay stubs are part of the payroll records employers are legally required to keep. Federal and state laws require businesses to retain payroll documentation for a set period of time:
As a best practice, retain payroll records, including pay stubs, for at least four years to ensure compliance with IRS rules and the FLSA, while also meeting any state-specific requirements.
Payroll software can automatically generate, store, and organize pay stubs in compliance with IRS, FLSA, and state laws. This not only reduces the risk of non-compliance but also makes it easier for employers and employees to access records when needed.
People often confuse "paycheck" and "pay stub." But they refer to different aspects of the payroll process:
In summary, a paycheck is the payment itself, while a pay stub is a record that explains the details behind the payment. Both are essential for transparency and record-keeping
A. A pay stub, also known as a paycheck stub or pay slip, is a document that provides detailed information about an employee’s earnings and deductions for a specific pay period. It includes details like gross income, taxes withheld, and net pay.
A standard pay stub usually includes:
Not under federal law. However, most states require employers to provide pay stubs in some form, either printed or electronic. A few states have no specific requirements, but even there, issuing pay stubs is considered a best practice.
No. States fall into different categories: some require printed or electronic stubs, some require electronic stubs to be printable, and some allow employees to opt in or out of electronic delivery. A handful of states, like Alabama and Florida, have no pay stub requirements at all.
A paycheck is the payment an employee receives, either by direct deposit or paper check. A pay stub is the accompanying statement that explains how the paycheck was calculated, showing gross pay, deductions, and net pay.
Start with gross wages, then review the breakdown of deductions such as taxes, insurance, and retirement contributions. The final line shows net pay—the actual amount deposited in your account or issued on your paycheck. Many stubs also include year-to-date totals to help track earnings over time.
Yes. Employers can create pay stubs using payroll software, accounting tools, or templates. However, to ensure compliance with state requirements, it’s best to use a payroll platform that automatically generates legally compliant pay stubs. Employees should not create their own pay stubs, except for personal recordkeeping.
Common deductions include federal and state income taxes, Social Security and Medicare (FICA), health, dental, or vision insurance premiums, retirement contributions, union dues, and court-ordered wage garnishments.
Managing payroll is a critical part of running a successful small business, and providing clear, accurate pay stubs is a key component of that process. Whether you’re new to payroll or looking to streamline your process, use the pay stub template and simplify the task. By prioritizing proper documentation, you’re not just avoiding potential issues but also fostering a more professional and trustworthy workplace.
Want more? Learn about the best practices for payroll management with this free G2 guide.
This article was originally published in 2019 and has been updated with new information.
Soundarya Jayaraman is a Content Marketing Specialist at G2, focusing on cybersecurity. Formerly a reporter, Soundarya now covers the evolving cybersecurity landscape, how it affects businesses and individuals, and how technology can help. You can find her extensive writings on cloud security and zero-day attacks. When not writing, you can find her painting or reading.
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