How Long to Keep Pay Stubs?

Anytime in the year, there might be one occasion where it might have struck you. Is there any need to keep old pay stubs? Employees and employers should retain their pay stubs. A pay stub is a document that contains various ranges of crucial tax and financial information.

For the workers, this information can be used to help them verify their earnings, pay their taxes, and ensure they are being paid fairly for their work. For business owners, a pay stub is of extreme importance. In some sectors, firms are legally required to generate and keep pay stubs for a specific period.

In addition to making, filing and keeping pay stubs easy, there are various advantages of creating your pay stub online. One such advantage is to pay stub generator free from Stubbuilder.

In this blog, we will be discussing what a paystub is, how long you need to keep a paystub, and whether should I keep my paystub with myself. So, let’s get started.

Paystub Contains Important Information

A pay stub is a document that contains several important tax and financial information. A standard check stub contains the following:

• Identifying Information: Compared to others, this includes the name of the employee, the name of the employer, and the perfect dates covered by the pay period.

• Gross Wages: Employee’s total amount of earnings during the specified pay period.

• Taxes/Deductions: This is the master key. A professional pay stub should include the whole accounting for where all the employee earnings went, including the taxes paid and deductions made out of the paycheck.

• Net Pay: A pay stub should state how much the employee took in net pay.

Why Do Business Owners Need To Keep Pay Stubs?

Employers keep a well-organized financial record, which is very important. To begin, the business needs to ensure that they always fully agree with the law. Many state and federal laws may be implicated.

In the context of how long you need to keep a pay stub, the Equal Employment Opportunity Commission (EEOC) denotes that many firms are required to keep employees’ records.

If your firm is facing a complaint from an employee, you will need to clear easily accessible payroll records. In addition, a well-organized payroll record can make it easier to complete various basic business tasks.

After the tax season arrives, it will be easier for your company to get everything done if everything is organized and on file with the financial statements and records. This is critical for small businesses, as these firms may not have the resources to hire someone responsible for paying workers full-time.

Why Should Employees Keep Their Pay Stubs?

Individual workers should also retain their pay stubs. For employees, check stubs come in handy for various reasons. An extremely common reason to keep an old pay stub? Income Verification. Though a few statements will work in your favour, a pay stub is the most basic source of income verification.

If you are applying for a bank loan or have been asked to produce your pay stub to verify your income during an employment negotiation, you will need to make your pay statements quickly.

How Long Do You Need To Keep Your Pay Stubs?

Below is mentioned how long you need to keep your pay stubs

• Employers: Employers should be very careful when it comes to holding onto the financial records of employees. You must ensure that your firm follows relevant local, state and federal labour regulations. With the Fair Labor Standards Act in mind, firms should keep payroll statements for at least three years. Your firm will keep these records longer than three years, but it helps manage the file if you have a determined date at which you will shred the statements. One of the best things about digital pay stubs is that they are easy to store and sort quickly.
• Employees: As an employee, can you share your pay stub? As per the rules, American workers should keep their pay stubs for at least a year. You should not leave your old pay stub until you have received your W-2 form for that year. Once you have received your W-2 form, you can use your old paycheck stub to verify that all of your tax returns are correct. After you have paid your income tax and received your tax refund, you will no longer need to keep your paycheck.

Conclusion

All the time to decide the duration for keeping pay stubs will depend on other factors; these include how long they should be kept for tax purposes, planning for finances, and personal choice. Pay stubs should generally be retained for at least one year as a safeguard for tax purposes or in case of disputes. Keep them for several years, as in the case of significant financial transactions such as purchasing a house, buying a car, or taking out a loan. This will allow them to have financial records which are accessible and correct if needed.