The Differences Between a Pay Stub vs Payslip: Everything You Need To Know

A pay stub vs payslip are both documents that tell you about your earnings. When you receive your pay, it usually comes with a paper or document that discloses what you earned. It can be called a pay stub, payslip, paycheck stub, or salary slip. The name depends on where you work and your location.

This document is a record of what you earned and the deductions made for each pay period. And you’ll need it in certain situations, like when taking a loan, renting a house, or filing your taxes.

In this article, you’ll learn what a pay stub vs payslip means, how they differ, what pay stubs are used for and how to get them. One way to get your pay stub easily is by making one yourself with an online pay stub generator. 

What Is a Pay Stub vs Payslip?

A pay stub vs payslip refers to two documents that have similar roles. Now, let’s discuss each one in detail:

What Is a Pay Stub?

A pay stub is a document that displays all the details about your earnings. These include your pay before taxes are taken out, the deductions made, and the amount of money you have left. Employers and payroll departments usually make these documents using payroll processing software. It is proof of income and also helps you make informed financial decisions. 

Pay stubs are most commonly used in the United States. Every pay stub has certain details about an employee’s earnings. When you look at your pay stub, you should see your gross salary, the taxes withheld, and your net income.

Examples of those taxes withheld are federal income tax and state income taxes. Also, there are FICA taxes, which are the Social Security and Medicare taxes. Other contributions include your retirement plan contributions and health insurance premiums.

What Is a Pay Slip?

A payslip, also called a salary slip, is a document that’s basically the same as a pay stub. In the UK, Australia, and other Commonwealth countries, the document that shows an employee’s earnings is called a payslip. In the U.S, it is commonly known as a pay stub.

Read More: A Complete Paystub Breakdown To Understand Your Paystub

Are Payslips and Pay Stubs the Same?

Although pay stub vs payslip have the same roles, they have some key differences:

1. Regional Usage

Geography is the major difference between the documents. If you work in the United States, what you’ll get is a pay stub. On the other hand, if you’re in the UK, Australia, or other Commonwealth countries, you get a payslip. The preference is merely a reflection of the place of work and not functional differences.

2. Information Detail

Pay stubs usually have a bit more information about your earnings. So, they focus on taxes withheld, retirement plan contributions, and benefits deductions. They will show federal taxes, state and local taxes, FICA taxes, and health insurance premiums.

Payslips tend to have more details on work hours, hourly wages or rates, overtime pay, and bonuses. However, this can vary by employer or country.

3. Format Delivery

Pay stubs can come in both paper and electronic forms. Your pay stub can be sent to you electronically through an employee portal or via email. Payslips used to be mainly on paper, but some employers use digital formats nowadays too.

Check Out: Create your own pay stub easily and get it delivered instantly

What Is on a Pay Stub?

Now that the pay stub vs payslip distinction is clear, here are some details you’ll find on your pay stub:

Personal Details

Your pay stub has details like your name and employee identification number.

Employee’s Gross Pay

This is the total amount you earn before any deductions are made. For employees who get a salary, their gross pay is their annual income divided by the pay periods. For hourly employees, it is the hourly wage multiplied by the number of hours worked, plus any overtime pay or other employee’s earnings.

Federal Income Tax

This is what the employer withholds for your federal taxes. It is based on what’s on your W-4 and your income level.

State and Local Taxes

Some states or local governments also impose income tax on an employee’s earnings. If your state does, these will appear on your stub separately.

FICA Taxes

This includes the Social Security and Medicare taxes. Social Security funds retirement benefits, while Medicare supports healthcare services.

Health Insurance Premiums

You may participate in the health insurance plan of your company. Your own contribution shows as a deduction, and it may cover medical, dental and vision.

Retirement Contributions

You may have retirement contribution plans like a 401(k) or any other pension plan. This shows up as deductions and reduces your taxable income.

Other Deductions

Some other deductions may also show up. For example, life insurance payments, union dues, wage garnishments or other voluntary payments.

Net Pay

This is also called net income or net salary. It is your take-home pay and what comes into the employee's bank account after deductions have been made.

Year-to-Date Totals

Your pay stub also shows the cumulative totals for the year. So, you can see your total income and how much tax has been withheld so far. 

Further Reading: A Complete Breakdown of Taxes and Pay Stub Deductions

What Are Paystubs or Pay Stubs Used For?

Pay stub vs payslip do not serve only as a record of an employee's pay. You can use them for many financial transactions, such as:

Filing Taxes

Your pay stub gives you the information that you need for your taxes. When tax time comes around, you’ll need to prepare your tax return. So, you can use your last pay stub of the year side-by-side with your W-2 form to check the relevant details. This can help you ensure that all the numbers are correct and you pay the correct amount of tax.

Renting an Apartment

If you want to rent an apartment, a landlord will need you to prove your income. Many of them prefer your recent pay stubs. They use the documents to ensure that you’re employed and are earning a decent salary to afford rent.

Securing Loans

You may need to get a mortgage, a car loan, or a personal loan. Lenders may ask you to submit pay stubs to determine your creditworthiness. To determine whether you are eligible, they will check the details on your pay stub for your financial stability.

They’ll look at gross income, net income and whether you have been stable at a job. Pay stubs allow them to decide whether they believe you will be able to repay the money or not.

Tracking Financial Progress

Checking your pay statements from time to time will help you keep track of your financial progress. You can find out whether your pay has increased over time, whether your deductions are correct, and if you’re being paid fairly. It plays a major role in budgeting, as well as financial planning.

Resolving Payroll Processing Errors

If you have a copy of your pay stub, you can quickly notice any errors. That could be the wrong number of hours worked, wrong deductions or missing overtime pay. Since your pay stub gives you these income details, you can raise the issue with the HR department. Also, your stub can serve as evidence.

Also Read: What Does Using Pay Stubs for Loan Applications Look Like?

How To Get Your Pay Stub

Here are some ways to get your pay stub:

1. Request from Your Employer

The simplest way to get your pay stub is to ask your employer or payroll department to send you a copy. Most employers have payroll records and can give you a printed copy or email you an electronic stub. Federal law, such as the Fair Labor Standards Act, requires companies to maintain proper payroll records. State laws usually require employers to provide pay stubs to employees to show an employee’s earnings for the given pay period. However, not all states require employers to issue stubs.

2. Employee Portal Access

Many companies now have employee portals that allow you to access your pay stubs online. During your onboarding, they will give you the login information. That way, you can access your present and past stubs at any time. Think of this as a self-service option that does not require you to wait around until they send you paper copies.

3. Use a Paycheck stub Generator

Now, you may be an independent contractor or a self-employed person. If that's the case, then you aren't getting official stubs from an employer. You can create pay stubs with online pay stub generators. 

With these tools, you can input your information. Then, they provide you with a professional stub to prove your income. Ensure the figures are correct so that your pay stubs show your actual income and the correct deductions.

4. Check Your Email for Electronic Pay stubs

Some companies issue electronic stubs, and they do this by emailing them to staff at every pay period. Whenever the pay period comes around, check your work and personal mail. You can get digital copies that you can save and access whenever you need them.

Check Out: Generate your pay stub in minutes with professional pay stub templates

Final Thoughts

Pay stub vs payslip are documents that tell you all about your earnings and deductions. Knowing what each one does helps you to be aware of and keep track of your finances effectively. Whether you get a basic salary or an hourly wage, you know how you can make good use of your pay statements. Always maintain a record of your stubs and review them to ensure you are getting the correct pay.

Whether pay stub vs payslip, it's clear that you need pay statements. You may be self-employed, a freelancer or just someone who needs a pay stub quickly. Our pay stub creator allows you to create precise and compliant stubs within minutes. Get started today, and let's help you get on top of your finances.