Pay stubs are important documents that inform employees how their wages for a particular pay period have been calculated. Because these documents show income, taxes, deductions, contributions, and other relevant details, they can be used as legal proof of income, especially when the employee is applying for a loan.
Whether you have just a few employees or a large team, making pay stubs isn’t a complicated process. However, you will need to choose a solution that will help you generate these documents quickly without making calculations manually.
Choosing a program to make pay stubs easily.
Whether you want to generate a pay stub for yourself or your employees, it is essential that you first identify an easy and affordable way to get what you want.
Fortunately, there are many different options available. These include using the payroll system, a Microsoft Excel template or, a paid/free paystub generator. The suitability of each option will largely depend on your budget and the end product you want.
For example, a downloaded Microsoft Excel template or a free paystub creator will suffice for small businesses owners with only a few workers or employers who don’t want to outsource payroll services.
However, a business owner who wants more control over how their pay stubs look can opt for a paid check stub maker that offers more robust features. Most providers of paid options tools will either charge per pay stub or a specific cost for a bundle of pay stubs, making this option only suitable for small and mid-sized businesses.
How to make a check stub for your new business?
Regardless of the program you choose to create paycheck stubs for your employees, making a pay stub shouldn’t be difficult. It involves filling out your company and employment details.
However, you must be ready to make several calculations and fill out the results. Some of the standard calculations will include:
Gross pay is the amount of money you earn in a pay period. Usually, things like taxes are not included in gross pay, as this is the figure one gets before deductions. So if someone says they earn $20 hourly and work 30 hours every week, their weekly gross pay would be $600.
In most cases, you don’t have to calculate your gross pay when creating paycheck stubs because you already have a specific figure at the end of every pay period. However, your gross salary will vary at the end of every pay period if you work hourly, so you may have to make calculations.
Net pay refers to the amount of money one takes home after taxes and other deductions. To come up with this figure, you have to subtract all possible deductions from your gross pay. All deductions are often outlined in the paychecks.
A deduction refers to any amount of money taken out of your pay. These can include local taxes, state taxes, Social Security taxes, and retirement plan contributions if you have a retirement plan.
Calculating deductions can sometimes become challenging because different states have varying taxes, while local taxes may not apply in other cases. Therefore, make sure you refer to the IRS Employer’s Tax Guide to understand if you have to pay local taxes based on where you live.
When generating your pay stub, ensure that you include all deductions and the specific amount for each category. More importantly, keep local and state deductions separate.
Making pay stubs should be super easy, no matter how many employees you have. However, it takes the right tool to create accurate and professional-looking paycheck stubs.