Get this: according to the Workforce Institute, a whopping 82 million American adults have had major issues with their paycheck at one point in their professional careers.
Not impressed? In case you’re not great at math, that adds up to over half of the American workforce.
The point is this – if you’re a new business, one of the most important things is learning how to make an employee pay stub. Follow our short guide so you can master how to do it!
What Does a Pay Stub Look Like?
If you’ve started your own business, then you’ve probably wondered what a pay stub looks like. Before we dive into what the answer is, let’s talk about what’s actually on employment pay stubs first.
Not only does a payroll stub keep track of wages for each staff member’s payroll period, but it keeps your company’s payroll log up to date as well. On top of that, your employee’s pay stub also shows deductions and taxes that are removed from their earnings too.
Lastly, a sample pay stub will also show your staff members the amount that they’ll take home in net pay.
Want to take it to the next level?
Try giving your staff a choice between printed pay stubs or electronic pay stubs. Now, let’s get this straight. In certain parts of the United States, your business is required to give employee pay stubs on a regular basis.
Using a pay stub template, you have to make sure that you provide all the information required by your state. Bonus points for keeping an extra copy of each payroll to make your tax filing season even easier.
What’s the point of pay stubs, anyway?
For those of you who are unaware, pay stubs include vital info for both employees and employers to benefit from. As if that’s not enough, employees use pay stubs to keep track of their wages.
That way, every single one of your staff members will know that they’re getting paid on time and completely understand their tax deductions. As for employers, pay stubs are great to take care of employee pay discrepancies.
Having an issue with the staff member’s paycheck?
Check your payroll records to make sure that you’ve got everything straightened out. Also, don’t forget to pull out your payroll record to fill out W-2 forms!
What’s Included on a Pay Stub?
Are you still asking yourself, what’s included on a pay stub?
Some of the most important things that are printed on a pay stub include:
- Gross wages for employees
- Contributions, deductions, and taxes
- Net pay for employees
Let’s take a moment to talk about gross wages. When it comes to gross wages, this is the total sum of earnings that each employee has made during a certain pay period.
But here’s the catch: the amount of money displayed on the gross wages section only shows the staff member’s full earnings before tax additions are removed. While everyone uses different calculations to figure out gross pay, it all depends on if you pay your employees on an hourly or a salary basis.
What happens if you pay your workers by the hour?
The answer is simple. All you have to do is multiply the number of hours worked by the staff member’s hourly rate of pay.
For those of you who choose to pay employees on a salary basis, just divide the number of annual pay periods by each employee’s salary. Shown on their weekly or monthly pay stub, gross wages are usually split into two different categories.
While one will show pay period information and the amount of gross pay, the other will show the annual totals.
Curious about what else is displayed on a pay stub?
You might not be shocked to find out that employee pay stubs show the hours that they work during a particular pay period. Of course, workers that are paid on a salary basis can also have their hours worked reflected on their pay stubs.
That’s not all. Most employee pay stubs also display things like double time, overtime, and regular hours too.
Could it possibly get any more convenient? We didn’t think so!
Pay Stub Essentials: Taxes and Net Pay
Let’s face it: including taxes and net pay on your payroll records are clearly pay stub essentials. Since employees do not get to keep all of their gross wages, displaying deductions and taxes on their paychecks will show them why their earnings have decreased.
Similar to gross wages, deductions and taxes are split up into two separate categories. To put it clearly, one item will show standard deductions, while the other will show annual amounts.
What’s the real deal about employee tax deductions?
Most of the time, state tax apartments and government agencies work together to tax your staff member’s income. A few of the most common tax deductions include:
- Federal income tax
- The worker’s portion of FICA tax
- State income taxes
- Local income taxes
Be sure to use a different line for every tax, showing the deduction amounts for each pay period.
How about other deductions like benefits?
Actually, this depends on what sort of benefits you give to your employees. For instance, staff members may want to give a certain amount of their income to retirement plans or insurance premiums. Better yet, employee deductions can also involve:
- Charitable contributions
- Loan payments
- Voluntary deductions
Listing each deduction separately, make sure that you show year-to-date and current totals.
Need a refresher on net pay?
Allow us to enlighten you. Net pay is described as the leftover amount of gross pay after standard deductions are taken from that amount.
Also known as an employee’s “take-home pay,” this is the number that you will write down on the staff member’s direct deposit or pay stub. Don’t forget to include both year-to-date net pay and current net pay on your employee’s paystub.
Want to know the best part?
Pay stubs are great for checking deductions and earnings for accuracy.
Can’t beat that!
Making a Pay Stub for Employees: Gross Pay
Having a hard time making pay stubs for employees?
We feel your pain. For starters, grab your calculator and start cranking out the math for each staff member’s gross pay. To make things even easier for yourself, there’s no harm in using a spreadsheet program like Excel to do the hard work for you.
First things first, start by creating separate columns for net pay, each tax deduction, and gross pay. At this point, you might want to find a standard pay stub template that you can use again and again for every employee. Plus, this is great information to keep for your company’s records as well.
Once you finish crunching your numbers, it is super simple to plug this information into a simple pay stub generator. Now, let’s work on calculating gross pay. For the uninitiated, this is the first step for making your own pay stub.
Do you have salary employees on your payroll?
If yes, then the process is surprisingly easy. As we mentioned above, dividing their number of paydays by their annual salary is all the math that you have to do. Sometimes, you might have to calculate the money that was deducted for unpaid vacation days.
In that case, just remove the amount from the total gross pay. For those of you who pay workers by the hour, multiply their hourly rate by hours worked for each employee. For example, a worker that’s paid $15 an hour for 40 hours a week would make $600 per week.
Dealing with overtime pay?
Multiply the rate that you pay them an hour by 1.5. Next, try multiplying the number of extra hours worked by the sum that you calculated in the previous step.
Be sure to add any commissions earned or bonuses to your calculations too!
Making a Pay Stub for Employees: Deductions
Ready for the next step?
If you are trying to make a pay stub for your employees, you have to include their annual deductions. Besides this, clearly stating various local, state, and city taxes is a mandatory requirement as well. Also, adding medical insurance, retirement payments, and other withholdings is standard too.
Here’s the deal: federal taxes are dependent on the staff member’s gross annual earnings. You can also find out this information by looking at tax tables provided by the Internal Revenue Service. Don’t be surprised to see different amounts according to head of household and marital information for each employee.
But here’s the kicker. Not every region charges local government taxes. To be sure, double-check with the local authorities in your area.
How about FICA tax withholdings like Medicare and Social Security?
If you need to figure out this sort of calculation, multiply the staff member’s gross wages by 6.2 percent for Social Security deductions. As for Medicare, do the same calculation, except multiply the gross wages by 1.45 percent.
Make sure that his calculations are clear and the proper worksheet columns. Since you’re the boss, it’s your responsibility to match these calculations. If your company sponsors 401(k) plans or life insurance plans for staff members, you can deduct these premiums before taxes are calculated.
The result is this – the employee’s amount of taxable gross wages will be reduced. Of course, you can only deduct Roth 401(k) after taxes. Thus, this doesn’t really have an impact on the total amount of taxes that are due.
As for wage garnishment, these deductions are subtracted from the employee’s total annual salary. Pro tip: wage garnishments are taken out after taxes as well!
How to Make Quality Employee Pay Stubs Online
Looking for a quality paystub generator?
If that’s the case, then you’re definitely going to need one if you want to learn how to make quality employee pay stubs online. After you’ve calculated the net pay for all of your staff members, it’s time to put all of these numbers into an online paystub generator.
Here is how it works. Once you open your online pay stub generator, choose the stay that you are residing in from the menu listed on the screen. That way, your state taxes will be calculated for you in advance.
Now, click on the box that asks who the paystub is being created for. Make sure that you indicate whether it’s for yourself or your staff members. Then, fill in important details such as:
- Personal employee information
- Company information
- Salary information
- Hourly rate information
- Amount of hours worked
- Amount of overtime hours worked
- Annual bonuses
- Tax withholdings
- Tax deductions
What should you do next?
It’s easy – submit your payroll information and choose your favorite template. Then, paying your employees is easy. Just download or print your pay stub information and you’re done!
Master the Employee Pay Stub Process
Want to master the employee pay stub process?
If you’re nodding your head yes, then take advantage of the information that we provided in your employee payroll guide. For those of you who aren’t even sure what a pay stub looks like, we’ve got all the answers that you’re searching for.
Plus, figuring out what to include on your staff member’s pay stub should be a breeze with our helpful tips and tricks. Once you find the right online pay stub calculator for you, the rest should be a piece of cake.
Don’t have too much fun!
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