I’m not going to go into more detail than that, so if you can’t answer the question, that’s fine.
But I figure if you work in the right industries, you know what I’m talking about and can share your knowledge.
Much obliged.
Do you just mean direct deposit?
A paycheck is a check that is written to you with your net pay for the period, and deposited in the bank. You may or may not get a copy of the check back from the bank.
A pay stub, possibly, has your net and gross pay listed on it as well as a breakdown of your withholdings. Or it may be as simple as just showing the net pay and date. You get to keep it.
If you get direct deposit, there’s no paycheck to be had. The only record of your payment is the pay stub.
They really are two different things…is there some deeper meaning to your question? Do you mean to ask “why is a pay stub preferred as a means to verify income over a paycheck”?
I’m going to assume you’re talking about direct deposit, vs. an actual check. I’ve had direct deposit at every job I’ve had for most of my adult life, and wouldn’t have it any other way.
Advantages to the employee:[ul]
[li]Money is automatically put into your account, sometimes on the day before the actual payday, but no later than first thing in the morning on payday.[/li][li]You don’t have to make a special trip to the bank to deposit or cash your check.[/li][li]You don’t have to worry about the check getting lost or stolen before you get to the bank.[/li][li]Funds are available in your checking account immediately, instead of 2-10 business days later if you deposit a check.[/li][li]You can schedule automatic payments from your bank account to pay your bills, etc. with confidence that the money will be there to cover them[/li][/ul]
Advantages to the employer:[ul]
[li]The cost of direct deposit is significantly less than the cost of a physical check.[/li][li]If problems are discovered they can be quickly resolved without having to issue a new check.[/li][li]The employer doesn’t have to worry about someone losing a check and having to stop payment and re-issue, then deal with the bank to sort out the problem when both checks are cashed.[/li][li]No worries about an employee hanging on to a check for months before cashing it, and having to reconcile your bank account with outstanding checks each month.[/li][li]Easier record keeping and reporting.[/li][/ul]
I’m sure there are other advantages, but I can’t think of them right now.
I can have the monies direct deposit to differnt accounts. I can do three. Lots less screwing around, trips to the bank on my part. If there is a screw up (haven’t had one in 18 years), it’s not my fault.
Can’t lose the check. My paystub details pretty much everything twice a month including available vacation and sick leave.
It’s deposited when you are on vacation. Saves time, money and paper for everyone.
What’s not to like?
That might be true for larger employers, but I can say, with certainty, that when it comes to smaller employers (we have about 10-20 employees depending on the season) it’s considerably more expensive and not very advantageous. The two times that we looked in to it, it was on the order of $1 per employee per pay period. Also, as an employer (and the person who does the bank reconciliation) I really don’t care if a check doesn’t get cashed before the end of the month, it really makes no difference at all as far as my book keeping is concerned.
I’m not really sure what you mean by record keeping and reporting, I’m not sure why it would make a difference in that respect one way or the other.
The only advantage we saw was that with one of the services they offered an additional service where they paid all the state and federal taxes for you and took responsibility for any errors, but I’ve never really had any problems with that so it wasn’t an issue.
Things must really vary a lot depending on circumstances. The company I work with, which has a few hundred employees, has had direct deposit for years. But not only that – they just announced that they are switching to e-paystubs. Paystubs won’t be sent in the mail anymore. Instead we can see them online at a special website, and nowhere else. Same thing with the W-2 tax form.
Yes. And I’m talking stub vs. CANCELLED checks.
Why couldn’t you have included that clarification in the OP instead of being deliberately obscure?
You still get stubs along with paychecks even you don’t get direct depost.
The OP seems rather vague for a General Question. Let’s try IMHO. Moved.
samclem Moderator, GQ and IMHO.
I must be missing something. Do you have other people’s canceled checks? You get the stub, the person who wrote the check gets the canceled check. After cashing the check, the only thing you have left is the stub unless you want to make copies of all of the checks. But then, that’s what stubs are for.
No thanks, I’m not interested in opinions. I wasn’t as good as Zipper was, but he got it exactly:
There is a factual answer to that, and that’s what I am asking for, please.
Because the paystub shows the gross amount and the check only shows the net amount. Somewhere on this forum, there is actually a thread about why lenders prefer to see the gross pay instead of the net pay.
Is this what you are asking?
A paycheck doesn’t have much information – typically just an amount, who’s paying, and who it’s payable to. It doesn’t say how frequently you get paid. So you have a $2000 paycheck – do you get that weekly, biweekly, or monthly? Is it something you earn normally? Perhaps you just earned some extra pay from a lot of overtime.
The paystub has all of that information.
The question is still unreasonably obtuse, but now that everyone has attempted to decipher it, you’re asking, “Why is a pay stub (instead of a printed, physical check) preferred by potential lenders as a means of income verification when applying for a loan?”?
This isn’t a factual answer, but the obvious guess is that only poor people work in jobs that don’t have direct deposit or issue that check-card things to their employees (okay, okay, I’m exaggerating a bit). But seriously, a huge number of people don’t get pay checks any more. And if they did, it would only be net. People who loan money are looking for things like debt to income ratio, and you’re not going to see that on a pay check. And even for suckers that still receive paper checks, who’s going to want to wait a week to deposit it while (e.g.) shopping around for credit? Oh, and if I don’t take out a cash advance against the company credit card, my expenses get reimbursed via check. Who’s to say that I’ve not been saving my expenses up for two years, waiting for a big check that I can fraudulently say is my weekly check? And checks don’t specify pay frequency. That $10 check may be impressive for weekly pay, but it’s worth a whole lot less if you’re paid monthly.
And along those lines, all pay stubs I have had show the pay for year to date. Just showing one paycheck could give a misleading amount - e.g. got a $1,000 bonus in that pay period.
Paystubs often include additional information, such as vacation time accrued, medical and retirement withholdings, YTD salary amounts etc.
Regardless of direct deposit or not, it is my record of payment. Even if I deposited a paycheck, there is not canceled check I would see.
ETA: For a factual answer- it is my record of payment. Without a stub there is no record I would get, beyond my bank statement.
Basically repeating what others have said, but in summary, it is impossible to determine how much money you really make by looking at your paycheck. It is usually easy to determine this by using the pay stub.
And, as mentioned above, you don’t have the canceled check, and the people wishing verification would not take a copy.
Gross pay is more or less constant. Net pay varies wildly. Besides the bonus issue, if you go over the Social Security max salary your take home pay suddenly jumps. Do you take a check from before or after this period?
Why would anyone think a canceled check is better? I’m not seeing it.