Some business practices are not to be neglected for progression. Pay stubs are one of them. The document helps employers keep track of their employee's hours and paychecks. Also, employees can use it to calculate their pay and ensure it’s correct.
Making a pay stub is a necessary skill for any business owner. It keeps you in the know of employees' payments. Also, you can easily tell if the pay stub isn't done well if you source out the job. Read further for an ultimate guide to pay stubs for small businesses.
What Is Pay Stub?
Pay stubs are a great financial record keeper that help employees and employers track paychecks. They also serve as a gross income breakdown, displaying the wages an employer earns for a set period, with deductions, overtime, commissions, taxes, bonuses, and other relevant details.
If an employer feels short-changed, they can check the pay stub to know how much was withheld and for what purpose. Usually, employers attach pay stubs to their employee's physical paychecks. Which explains the name pay stub.
But now, with the convenience of internet payment methods, that's all changed. Employers now generate pay stubs digitally for direct deposit payments. Employees can download the pay stubs whenever they need them.
Here are reasons employers need pay stubs and should create them for their employees.
Why Small Business Owners Need Pay Stubs
Though the law does not stipulate the provision of pay stubs to employees, it's however one of the best practices of payroll accounting. Small businesses need pay stubs as a receipt of employee payments. It's a way to prove that tax payments and retirement plan contributions were made in a given time frame.
Why Business Owners Need to Create Pay Stubs for Employees
Pay stubs are not as important to employers as there are to employees. They are important documents that employees use as proof of income for a loan application, renting an apartment, or getting a mortgage. Pay checks could also be used by workers to prove their eligibility for social services.
How to Make Pay Stubs for Small Business
Making pay stubs for your employees has been made a whole lot easier with payroll software providers or pay stub generators.Here's a step-by-step guide to creating a pay stub for w-2 employees
Step 1. First, Indicate the Employee’s Income for the Current Pay Period
State the employee's income for the current pay before anything else. It helps offer clarity on deductions, taxes, and other details that follows suit.
Step 2. Add Deductions for Taxes Withheld
Here, you’re to add deductions from federal to state taxes, and FICA. The employee needs to know their taxes are being paid. This way, they won't be caught unawares in the future with unpaid taxes.
Step 3. Deduct Health Insurance and Employee-elected Retirement Plan Contributions
Now that you’ve gotten the tax out of the way, deduct their health insurance and elected retirement plan contributions. Ensure the deductions are correct.
Step 4. Add Other Deductions
If there are other deductions like insurance coverages or penalties, add them and stipulate what the deduction is for.
Step 5. Calculate the Net Pay
Here, you calculate and detail the payment the employee is to receive.
After generating the pay stub, attach it to the paycheck. Or provide the pay stub on your organization's website or send it via email to the employee. Here’s how to make pay stub online.
How To Make Pay Stubs for Employees
If you’re making a pay stub yourself, use this guideline to prepare
Step 1. Input the Company Information
Here, you will record the company name, address, email address and location. The information will vary depending on the pay stub generator you use.
Step 2. Enter Your Employee Information
Input your name, email, employee ID, role, and city. Also, this is dependent on the platform you use.
Step 3. Enter Your Income Information
Here you will fix in your base salary
Step 4. Enter Deductions, Bonuses, and Other Details
Fix in other details that will help the generator facilitate the pay stub generation.
How to Choose a Paystub Generator
Pay stub generators consolidate all the payroll data and invoices you input to create pay stubs. There’s no need to hire an accountant to oversee the generation. Pay stub generator sites list out the data you're to enter, making it easier for anyone to use them.
If you're looking for a pay stub site, keep these points in mind.
User-friendly Website Interface: Ensure the platform has a user-friendly website. This will help you navigate the website effortlessly without needing help.
Allows You to Export With PDF: Check if the pay stub generator allows PDF export. This way, you can easily send the file to your employee's Email.
Free to Use: There are websites that offer paid pay stub generators and others that are free to use. If you’re on a budget, save money with an online pay stub generator
The Number of Pay Stubs To Be Generated: Consider the number of employee pay stubs that are to be generated. The free version can only cover so much. You might need to upgrade to the paid version if you’re generating a lot of pay stubs.
Budget: Check your budget and compare prices between pay stub generator websites. Stick to the brand whose price
Should You Make Your Pay Stubs?
Yes, you can develop your pay stubs. If the design is not important to you and you would like to have more control over your pay stub, you can use software like Microsoft Word or Microsoft Excel.
There are also lots of free visual tools online that allow you to customize pay stubs. However, it's a bit more tasking than having your employer use payroll service to automatically calculate the pay, and withhold taxes and deductions.
Should You Opt-in for a Payroll Service?
Payroll services help make accounting and paying employees easier. Credible payroll brands can pay contractors, handle benefits and deduct employee taxes. Opt for payroll service if you're swamped with work and need such services to handle payday. They offer payroll services from basic to advanced.
Frequently Asked Questions
What should employers put on pay stubs?
Usually, employers include gross wages the employee earned, whether on an hourly rate, or annual salary. It also includes commissions and bonuses from the employer to the employee with their taxes from federal to state or local taxes withheld from the paycheck.
You won’t find any service the employer doesn’t offer like Medicare and retirement plan contributions. If you’re wondering what does a pay stub look like? Click on the link.
Do the self-employed get pay stubs?
Self-employed individuals usually do not need pay stubs because they don't receive paychecks. But they might require one if they intend to apply for credit cards or mortgages. In such cases, they can generate their pay stub using a pay stub generator.
Their pay stub will not look like a typical pay stub. Some information will differ from an employee's details. For instance, the pay period frequency. Self-employed people might not get paid as frequently as an employee. Or they might be paid per hour or project.
What is the best paystub generator?
The best pay stub generator depends on your needs or better still, your business. If you’re running a construction site, for instance, look for B2B providers with pay stub generators tailored to such payment types.
Additionally, the best site allows for customization. However, you might need to subscribe to the paid version to access their full features because customization is limited in the free version. If you’re a small business owner, you can use Real Check stubs for your pay stub generator.
They offer an editable pay stubs maker you can use to generate your employee's pay stub in record time. The site is user friendly with clean and simple designs and allows for easy navigation. Also, they offer free services, helping you to save money. Here are examples from RealCheckStubs.com Pay Stub Generator
How to make pay stubs for free?
Head to Real Check Stubs, and select a pay stub template. Next, fill in the required details for the pay stub generator, then submit and download the document. Before using the site, ensure you have all the required details at hand to avoid delaying your application.