If you have a business with working employees, then it’s essential that you provide your employees with pay stubs. Not all states require that you provide your employees with pay stubs, but most states require that a business give their employees a pay stub at least one day after their pay date. But do you know how to make pay stubs?
Aside from laws, there are several reasons why you might need to provide your employees with pay stubs. Below we describe why you need pay stubs and how to make them!
Why your business needs pay stubs
Pay stubs serve as proof of earnings, contributions towards taxes and deductions, and more. Your employees may also need pay stubs to serve as proof of income for some of the following:
- Applying for financing or a mortgage
- Requesting a credit check
- Renting a house
These pay stubs will also serve as a form of proof and records when filing taxes, or a dispute with an employee.
Information to include on your pay stubs
There is some key information that needs to be placed on every pay stub when you’re creating them. This key information is as follows:
- The employee’s name and address
- The company’s name and address
- The pay period’s dates for which the employee is being paid for
- The employee’s gross salary for that pay period
- The employee’s regular pay rate and regular hours for that pay period
- The employee’s overtime pay rate and overtime hours for that pay period
- The check number and bank information
- The voluntary deductions such as medical insurance
- The mandatory deductions such as taxes
- The amount set aside for the employee’s retirement fund and related information
- The date of payment
- The employee’s net salary
- The employer’s signature
For legal reasons, and to keep track of all finances, be sure to make your own copies of these pay stubs to have on file.
How to make Pay stubs
There is some math involved when creating pay stubs. Fortunately, there are websites that provide online pay stub generators such as Paystubcreator.net. Using a pay stub creator saves you time and hassles.
Online pay stub creators require you to fill out some information and then it accurately does the math for you. Here are some things that you’ll need to know.
Calculate employees gross pay
For employees paid salary, just take their salary and divide it by how many paydays there are per year. For hourly-paid employees, take the number of hours that they worked and multiply it by their hourly pay rate. For overtime, take the hourly pay rate and multiply it by 1.5, then multiply that by the number of overtime hours worked.
Calculate deductions
Be sure to calculate all deductions correctly. These include federal, state, and local tax deductions, FICA tax withholdings, retirement pension, insurance, 401k plan, and any wage garnishments.
Net pay
The net pay is the final amount after all additions and deductions are calculated into the pay. This is the amount that will show on the employee’s paycheck.
Keeping it simple
When it comes to creating pay stubs for your employees, things can get difficult. This is especially true if you’re not a wiz at math. Keep things simple by using an online pay stub creator, and let it do the math for you!
And for more business help, be sure to check out our posts in our Guide section.
