Pay stubs aren’t really required by the federal law, but it’s ideal to make pay stubs for your employees and for documentation.
Why is a pay stub essential?
A pay stub is a proof of income. It also indicates your contribution towards deductions, like pension fund, medical insurance, social security, taxes, and others. Moreover, you or your employees may need a proof of income for the following purposes:
- Applying for a loan
- Renting a house
- Requesting credit
As an employer, if you like to be certain about your taxes, documenting the updated withholdings and deductions comes in handy. This is also useful when filing your tax returns. Should your employees lodge disputes, pay stubs can be a proof that you have paid your dues. Now, let’s talk about the process of creating pay stubs.
Creating a pay stub for your staff
- Calculate Your Employee’s Gross Pay
Gross income is the starting point. Just divide the annual income by the total number of pay days each year. It may be required to deduct money for the unpaid time off. The result is the total gross salary.
- Calculate Deductions
It’s a must to make pay stubs that clearly show the applicable state, city, and local taxes. Employers may also have to make a pay stub that shows withholding, like medical insurance, retirement plans, wage garnishments, and so on.
- Solve the Net Pay
The net pay is the total amount that remains after the additions and deductions to the gross wage are incurred. The net pay is the amount which will be displayed on the paycheck.
How to make pay stub for yourself?
If you have a salary in your own company, just calculate your pay stub amount the same way as you come up with your employees’ pay stub.
How to make check stub online?
After setting the figures, you can use online tools to create your pay stub. You no longer have to make the templates and tools yourself. Just leverage these online resources to save time and effort. Just follow the steps below:
- Check Stub Maker.
- Choose your state as the tax calculations will depend on where you reside.
- Give the necessary information (who the pay stub is for, personal details, company details, hours worked, pay per hour, bonuses, overtime work, etc.)
- You also have to prepare the data for the withholdings and deductions.
- Submit information and choose a template.
Some states have specific labor laws which require employers to issue the pay stub in a specific period. For instance, in Massachusetts, pay stubs should be given within 6 days after the pay period. Get in touch with the department of labor in your region to know the exact requirements of your state.
Indeed, creating pay stubs is never rocket science. Therefore, if you have a small business and still haven’t started giving your staff pay stubs, the best time to start doing so is now.