The Ways To Make A Pay Stub As An Employer Or Contractor
While pay stub is not mandated by federal law, it is a great policy to provide your employee with a pay stub to accompany them to take a look at every month or week. Some states require that you provide your employees with a pay stub within 1 day of the pay date. You may also be required to keep copies of the pay stubs for various reasons, so it’s always a good idea to manage them appropriately anyways. Read on to find out ways to make a pay stub for yourself or your employees without investing in expensive software or hiring a bookkeeper.
Why is a pay stub essential?
A pay stub acts as a proof of your earnings. It also indicates your contribution towards taxes and other deductions. These are things like taxes, pension fund, social security and Medicare contributions. You and your employees may require proof of income for the following reasons:
- Renting a house
- Applying for loan/finance or mortgage
- Requesting credit
If you want to be clear about your taxes, keep records of deductions and withholdings up to date. This is also helpful while filing tax returns. In case of dispute with an employee, pay stubs always serve as a record of all payments and withholdings regarding employment. Let’s figure out how to make a pay stub that meet all these requirements.
How to make pay stub for your employees?
1. Calculate your employee’s gross pay
Gross pay is the place, to begin with, a pay stub. For a salaried person, this is straightforward. All you need to do is to divide their annual salary by the number of paydays per year. In some of the cases, it may be necessary to deduct money for unpaid time off. This comes off the total gross pay.
2. Calculate the Deductions
It is imperative that you make use of a way to make a pay stub that shows all the relevant city, state and local
- Federal, State, and Local Tax deductions
The relevant Federal Taxes are calculated at the employee’s gross income and can be set up on the IRS tax tables. You will notice that the amounts differ according to the marital status and whether the employees is the head of the household or not. Remember that not all areas charge local taxes. Check with your local authority to be sure.
- FICA Tax Withholding (Social Security and Medicare)
To calculate these taxes, you need to multiply the employee’s gross pay by 6.2% for social security and 1.45% for Medicare. As an employer, you need to match these amounts.
3. Work out Net Pay
This is the amount that remains after all the deductions and additions to the employee’s gross salary or wage and is the amount that will appear on their paycheck.
How to make pay stub for yourself?
If you pay yourself a salary out of your company account, you will have to calculate the above in exactly the same manner as for your employees.
How to make check stub online?
Now that you have done all the calculations and have the figures at hand, we can show you how to make a pay stub for yourself or your employees.
- Open up our online pay stub maker
- Select your state of residence from the menu. (This will calculate any state taxes for you).
- Check the box according to who the paystub is for (i.e. yourself, or one of your employees).
- Fill in all the personal details
- Fill in the company details
- Fill in the rest of the required information (Salary, pay per hour, hours worked, overtime, or bonuses).
- Fill in the amounts for deductions and withholdings.
To learn even more tricks to kick-start your financial empowerment, visit https://paystubmakr.com!