Pay stub template and guide

Payday matters. It’s the heartbeat that keeps your business and your team in sync. When payroll runs smoothly, everyone wins. Confidence grows, stress shrinks and you get to focus on what really moves your business forward. But let’s be honest, payroll admin isn’t why you started your business. You want tools that make life easier, save time and let you celebrate your team’s wins.

This guide isn’t just another checklist. It’s your no-nonsense blueprint for creating bulletproof pay stubs: clear, professional and ready for anything. We’ll break down what you really need, why each detail matters and how a smart template makes payday a breeze. Ready to transform your payroll process? Let’s get into it.

What is a pay stub?

Let’s start with the basics. A pay stub isn’t just a piece of paper or a PDF attached to an email. It’s the receipt of the transaction between you and your team. You wouldn’t walk out of a store with a big-ticket item without a receipt, and your employees shouldn’t receive their wages without one either.

A pay stub details exactly what an employee has earned and, perhaps more importantly, what has been taken out. It is the definitive proof of income for your team. When your employees apply for a mortgage, rent a new apartment or need to prove their earnings for a loan, this is the document they rely on.

For you as an employer, accurate pay stubs are the backbone of a healthy business. They prove you are doing things right. They show you are withholding the correct taxes, paying the right benefits and keeping your side of the employment bargain. In the messy world of audits and compliance, a clear paper trail isn’t just nice to have. It’s your best defence.

Components of a pay stub

A perfect pay record doesn’t happen by accident. It follows a specific anatomy. There are non-negotiables that must appear on every slip, from general employee details to the nitty-gritty of financial figures. If you miss one, you aren’t just being sloppy; you might be breaking the law.

Here is what you need to include to make sure your pay stubs are up to scratch.

General information

This is the “who, when and where” of the document. It seems obvious, but you would be surprised how often it gets messed up. Every stub needs to clearly identify the employer and the employee. This includes the full legal name of the business and the employee’s full name. You also need the pay period dates. This tells everyone exactly which days of work are being compensated. Without these dates, the numbers below mean nothing.

Gross wages

Think of gross wages as the big number: the total earnings before the government or anyone else takes a slice. It includes regular hours worked, overtime pay, bonuses, commissions and any other form of compensation. Reporting this correctly is crucial because every other calculation flows from this figure. If your gross wages are wrong, your taxes are wrong, and your net pay is wrong.

Tax deductions

Buckle up, because this is where workplace reality hits hardest. You have to list the mandatory tax withholdings clearly. In Canada, this means Federal Income Tax and Provincial Income Tax. Your employees need to see exactly how much is going to the CRA so there are no surprises at tax time. Transparency here builds trust. When employees see the exact breakdown, they understand the difference between what you pay them and what lands in their bank account.

Employee benefit deductions

If you offer perks like health insurance, dental plans or pension contributions, the employee’s share of these costs goes here. Detailing these deductions shows the value of the total compensation package. It reminds your team that their employment deal includes more than just the cash deposit on payday.

Voluntary deductions

These are the opt-ins. Maybe your employee wants to donate to a charity directly from their pay, or perhaps they are buying into a stock purchase plan. Since these are voluntary, you need clear records that the employee authorized these deductions.

Involuntary deductions

Sometimes you have to play the bad guy. If you receive a court order for garnishments, like child support or unpaid debts, you are legally required to withhold that money. Listing these clearly as “involuntary” or “garnishment” protects you and explains to the employee why their take-home pay looks different than what they expected.

Employee’s net pay

This is the bottom line. The final take-home figure that hits the bank account. After all the additions and subtractions, this is the number that matters most to your team. It’s the money they can spend. Getting this number right is the single most important thing you do on payday.

Different types of pay stubs

Not all pay stubs look the same, and they shouldn’t. The format you choose depends on your business model, your tech stack and your team’s preferences.

The basic paper stub

This is the classic. It works, but it’s clunky. You print it out, stuff it in an envelope and hand it over. It’s tangible, but it’s also easy to lose. For a modern business, relying on paper feels a bit like using a fax machine—it gets the job done, but there are better ways.

Contractor layouts

Contractors aren’t employees, and their pay stubs need to reflect that. They don’t have the same tax withholdings, so their stubs are often simpler. However, they still need a clear record of hours worked or projects completed to match against their invoices.

Electronic pay stubs

This is the modern standard. Secure, accessible and eco-friendly. Electronic pay stubs live in the cloud. Employees can access them anytime, anywhere, usually via an app or a secure portal. They never get lost in the wash, and you save a fortune on paper and printer ink. Plus, if an employee needs a stub from three years ago, they can find it in seconds without asking you to dig through a filing cabinet.

How to create pay stubs

Generating a pay stub shouldn’t require a degree in accounting, but it does require attention to detail. Here is the step-by-step process to ensure every slip is accurate and professional.

First, gather your data. You need accurate time sheets or attendance records. If you are tracking hours manually, double-check the math. One wrong digit here ruins everything.

Next, calculate gross pay. Multiply hours by the hourly rate. Add in any overtime at the correct multiplier (usually 1.5x). Don’t forget bonuses or commissions.

Then, calculate deductions. This is the hard part. You need current tax tables to figure out CPP (Canada Pension Plan) and EI (Employment Insurance) contributions, plus income tax. These rates change, so make sure you are using the numbers for the current tax year.

Finally, subtract deductions from gross pay to get net pay. Once you have the numbers, plug them into your template. Review it for errors before you finalize it. A mistake on a pay stub is a headache to fix later.

How to customize our pay stub template

We know every business is different. That’s why a rigid, one-size-fits-all form doesn’t work. Our template is designed to be flexible. You need to make it your own.

Start by adding your branding. Put your company logo at the top. It looks professional and assures the employee that this is an official document from you.

Next, tweak the fields. If you don’t offer dental benefits, remove that line. If you have a specific bonus structure, add a field for it. You want the stub to reflect your actual compensation structure, not a generic list of things you don’t use.

You can also add a message field. A simple “Thanks for your hard work,” or “Happy Holidays,” can go a long way. It turns a transactional document into a touchpoint for employee engagement.

Benefits of using a pay stub template

You don’t always need expensive software to start. If you are a startup or a small SME, every dollar counts. Free tools can be a game-changer for keeping overheads low while maintaining professionalism.

Speed and consistency: A template means you aren’t starting from scratch every two weeks. You have a structure. You just fill in the blanks. This saves time and ensures that every pay stub looks the same, which makes record-keeping much easier.

Professional appearance: Handwritten notes or messy spreadsheets look amateur. A clean, formatted template tells your team that you take payroll seriously. It builds confidence in your leadership. If you can’t get the pay stub right, they might wonder what else you are getting wrong.

Cost savings: It’s free. You can’t beat that price. When you are bootstrapping, saving a few hundred dollars a month on software subscriptions can make a real difference. It allows you to invest that money back into growing your business.

Using Google Docs for pay stubs

Leveraging tools you already use is just smart business. Most of us live in Google Docs or Excel anyway, so using cloud-based document editors to manage your payroll records makes sense.

Pros:

• Accessibility: You can access it from anywhere.
• Collaboration: Your accountant can view the file without you having to email attachments back and forth.
• Version History: If you mess up, you can revert to a previous version.

Cons:

• Security: You need to be very careful about who has access. Payroll data is sensitive. Ensure your sharing settings are locked down.
• Manual Entry: It’s still a manual process. You have to type in the numbers, which leaves room for human error.

Choosing between basic and digital pay stubs

The shift towards paperless payroll isn’t a fad. It’s the direction the entire industry is moving. But is it right for you right now?

Traditional methods (paper or basic PDFs) are fine if you have two employees. You can manage it. But as you scale, paper becomes a nightmare. It takes up physical space. It requires manual distribution. Paper payslips belong in filing cabinets. Digital ones belong where your business is going.

Digital solutions scale with you. Whether you have five employees or fifty, the process is the same. You click a button, and everyone gets paid and notified. Digital stubs also offer better security. A piece of paper left on a printer is a data breach waiting to happen. A password-protected portal is much safer.

If you are planning to grow, moving to a digital mindset early saves you the pain of switching systems later when you are overwhelmed. It’s not about being fancy, it’s about being ready for what’s next. 

Example of a pay stub layout

Let’s visualize the end product. You want to see exactly where every piece of data should sit for maximum clarity.

Note: Please refer to the downloadable template for the high-resolution image version.

At the very top, you have the Header. This contains your Company Name and Address on the left, and the Employee’s Name and Address on the right. The Pay Period and Pay Date sit clearly in the top corner.

Below that is the Earnings section. This is a table. The columns are “Description” (Regular Pay, Overtime), “Rate”, “Hours” and “Total”. This breakdown prevents the question, “Did you pay me for those extra two hours?”

Next is the Deductions section. Also a table. It lists Federal Tax, Provincial Tax, CPP and EI. It shows “Current” (this pay period) and “YTD” (Year-to-Date). The YTD column is vital—it helps employees track their total contributions for the year.

Finally, at the bottom, is the Summary. Total Gross Pay, Total Deductions and Net Pay. Bold the Net Pay. It’s the number eyes go to first.

Understanding federal tax deductions

Navigating the complex world of government taxes is daunting, but as an employer, you are the taxman’s deputy. You have obligations regarding tax withholdings to ensure you never fall foul of the CRA.

You need to understand the difference between CPP and EI.

• CPP (Canada Pension Plan): Both you and the employee contribute to this. It’s for their retirement.
• EI (Employment Insurance): This provides temporary financial assistance to unemployed workers. Again, both you and the employee contribute, but the employer rate is 1.4 times the employee rate.

Then there is income tax. This varies based on how much the employee earns and the claim code on their TD1 form. You need to get every new hire to fill out a TD1 (Federal) and the provincial equivalent. These forms tell you how much tax to take off. If you don’t get these forms, you have to assume the basic claim amount, which might not be right for their situation.

For a deeper dive, check out our guide on calculating payroll deductions in Canada.

Ensuring compliance with pay stub regulations

Supporting your legal obligations starts with how you pay people. Regulatory requirements for providing pay information are strict. Ignoring them leads to fines and damages your business reputation.

In Canada, you are required by law to provide a pay statement on or before payday. It can be electronic or paper, but the employee must be able to access it and print it.

You must also remit the deductions you withhold to the CRA on time. The frequency depends on your average monthly withholding amount. Missing a remittance deadline is an expensive mistake—the penalties add up fast.

Compliance isn’t just about the CRA. It’s also about labour standards. Each province has its own rules about what must be on a pay stub. For example, some provinces require you to show the bank of hours for vacation pay. Make sure you know the rules for the province where your employees work, not just where your head office is.

Learn more about staying on the right side of the law in our payroll compliance section.

Tracking payroll with digital pay stubs

Data is power. Digital systems help you maintain a clear audit trail and gain better visibility over your labour costs.

When you use a digital system or a structured template, you create a history. You can look back and see exactly how much you spent on overtime last quarter. You can see if your benefit costs are rising.

This visibility allows you to make better business decisions. If overtime is costing you a fortune, maybe it’s time to hire another staff member. If you are spending hours manually correcting errors, maybe it’s time to upgrade your tools.

Digital stubs also simplify the year-end madness. T4s become a breeze because the data is already aggregated. You aren’t scrambling to add up 26 weeks of paper stubs for every employee.

If you are ready to move beyond spreadsheets, you might want to explore managed payroll services to take the load off completely.

Make payday a better day

Payroll shouldn’t be a headache that ruins your week. It’s the moment you reward your team for their effort. It should be a positive experience.

Transforming payroll from a chore into a win starts with streamlining the process. Using a solid template is the first step. It reduces errors, saves time and looks professional. It allows you to focus less on admin and more on celebrating your team’s hard work.

Remember, you went into business to build something great, not to be a payroll administrator. Use the tools available to you. Automate where you can. Simplify where you can’t.

If you find that even with a template, payroll is eating up too much of your time, look for better solutions. There are leave management tools and comprehensive guides to Canadian payroll that can help you take the next step.

Download the template. Get your process sorted. And get back to growing your business.