A Panoramic Guide To Your Earning Statement

Dec 27th, 2023

Most of the employee in America look forward towards the arrival of their earnings statements, which are commonly known as paystubs. But do you even know what is an earning statement, and how does it works?

In this blog, we will take you on a tour of pay stub, including how much you should be making, what taxes are taken out of your earnings and much more. If you want to create paystub, you should visit eFormscreator.

What is an Earning Statement?

An earning statement is a document outlining how much an employee has been paid over a specific pay period. This details gross earnings and then lists deductions taken out of your payments for taxes and other withholding purposes.

Earnings statement are referred to as a paystub. You can quickly generate paystub for your business via online paystub generators.

Earnings Statement documents a company’s profitability and shows how much money is lost. The earnings statements show earnings over time so that the interested parties might view how the firm is doing during a particular time period.

Earnings Statement V/S Balance Sheet

The earnings statement and balance sheet are two different financial reports. A balance sheet provides assets, liabilities, and equity at the same present revenue and costs over time.

In comparison to this, an earnings statement examines revenue and costs at a 12-month accounting period. This shows the company’s net profit and loss for that time period.

Format of an Earnings Statement

Earnings Statements can be categorized into two different types, namely Single-Step Earnings Statements and Multi-Step Earnings Statements. Both statements have the following components:

Sales: This is the total amount received via the sales of the firm service. It is the sum of all the revenue accounts.

Cost of Goods Sold: This is the total amount paid to purchase the goods sold within the specified time period.

Gross Profit: This is the amount of money which a company produces before operating expenses, calculated by deducting the costs of items sold from sales.

Operating Expenditures: Salary, Utilities and Advertising are some examples of the same.

Net Earnings: Whether the firm has made a profit or loss during the specified time frame, which is calculated by deducting the total expense from gross profit.

Recognizing Earnings Statement

Begin by double-checking the numbers if you have been entitled to examine an earning statement. The sole maths abilities required are addition and subtraction to make sure that the numbers are ideally computed.

What Information Can Be Found on an Earnings Statement?

There are various components to an earnings statement which can help determine how much an employee earns. Though some of the information won’t significantly impact how much money one makes, but other components tells vital information about your earnings.

Gross Earnings: The gross earnings will detail how much an employee has made before any deductions have been taken out. Gross Earnings include things such as commissions, hourly wages, and bonuses.

Taxes: Deductions on your paystub are vital because they detail how much of your earnings you bring home. For employees, it will list gross earnings, then numerate taxes and deductions taken out of payments for the specific pay period.

It is crucial to know how your taxes as an employee are deducted. Your annual income determines how much you owe in state, federal, and local taxes. Income taxes are deducted from the pay. The perfect amount withheld for federal income taxes will depend upon your earnings and how you file your earnings statement.

Time Off: Various earnings statements showcase time off and absence for the earnings period. This includes sick days, paid time off, and other abscene activities like jury duty.

Healthcare Contributions: Your earnings statements will also showcase how much of your earnings have been paid for helathcare. Employers must provide affordable healthcare under the Affordable Care Act so that it lists down if an employee has already had their insurance contributions subtracted from earnings.

Earnings Statement Analysis

The purpose of this typical format is to compute profit at every subhead of revenue and operating expenses, then account for mandatory taxes, interests, and other non-recurring events that arrive at net income relevant to common stock. Despite this calculation, including basic additions and subtraction, the sequence of the different elements in the statement and their connections can become duplicative and complex.


To sum up, earnings statements are vital for employees to know about. They provide detailed information about an employee’s earnings during a pay period. If you want to generate paystubs, you should visit eFormscreator.

For self-employed individuals, earnings statements play a more prominent and significant role because they build up your revenue. It tells you exactly how much money you have made and is the only way to determine whether or not your business was profitable in a specific period.