Pay Your People: How to Make Pay Stubs for Employees

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If you’d like to run a business efficiently, you’ll need to make employment pay stubs.

Pay stubs are one of the most important documents you can provide employees with aside from their checks. These stubs outline how much money they’re earning and where the rest of it is going. Without pay stubs, they won’t have a good idea of how much is being deducted from their check.

Unlike checks, pay stubs show how much an employee has worked. This lets them crosscheck to ensure they’re getting paid the correct amount. They can also see how much money went to taxes and other things.

“But I don’t know how to make pay stubs for my employees!” Don’t worry; we’ve put together a quick piece for you to learn more about pay stubs and how to make them.

Read on to learn everything you need to know.

What Pay Stubs Are Used For

Pay stubs are used for a variety of things, but they’re most commonly used for getting loans and keeping track of how much one has earned. When it comes to getting a loan, you need to show proof of income so the lender can see if you’re financially eligible.

A pay stub shows important information about one’s income, so the lender can see exactly how much you’re earning. This also makes for effective recordkeeping because you’ll know where you’re money is coming from and how much is being deducted.

Here are some common loans people apply for:

  • Home mortgages
  • Car loans
  • Credit cards

As a business owner, you should be providing employees with pay stubs each time you give them a check. Employers provide them because they’re required by the Fair Labor Standards Act to document employee wages.

Although the FLSA doesn’t specify that pay stubs should be provided, it makes it easier for employers to keep track. Whether you’re trying to make pay stubs for yourself or an employee, the same information will be on it.

Choosing a Program to Make Them

Understanding how to make pay stubs for employees or independent contractors isn’t a difficult process. The first step to making a pay stub is to figure out which program you’ll use. Any program that offers spreadsheet features will be good enough.

When people get into making pay stubs, they often choose either Google Sheets or Microsoft Excel. Google Sheets is a browser-based spreadsheet maker that can be accessed from most devices. The main benefit of using it is that you can save your pay stubs via the cloud.

Microsoft Excel is a program that’s installed on your computer, so it lacks the cloud-storage feature that Google Sheets has. However, it offers a plethora of features to let you personalize your pay stubs as much as you’d like.

Choosing a program essentially comes down to whether you want to access the pay stubs from anywhere or have more customization. In most cases, Google Sheets will be a better option because you don’t need much to make a pay stub.

Use a Pay Stub Generator

If customizing a pay stub isn’t something you’re interested in, you can use a check stub maker to put together a quick template for you. Pay stub generators are used by those that want to save time and ensure they have a professionally made pay stub.

When you make pay stubs with a generator, you can choose from a variety of templates to suit your needs. All you must do is insert the information required on the pay stub, and you’ll be ready to print it out.

You’ll be required to fill in things like the employee’s name, address, social security number, and employer information. You’ll also need to know the gross pay, net pay, and deductions of the person that’s getting the pay stub.

Calculating the Income

Coming up with gross pay, net pay, and deductions is simple, providing that you know how much you’ve earned in a pay period. A pay period is a duration in which the hours you’ve worked are applied to a paycheck.

Your gross pay is the amount you’ve earned before taxes and other deductions. Let’s say your pay periods are two weeks at a time. You work 20 hours a week at $13 an hour. You’d be earning $520 every two weeks, which would be your bi-weekly gross pay.

After you come up with the gross pay, you’ll need to figure out how much money will be deducted from your check. These are things like Social Security, state, and local taxes. Refer to the IRS Employer’s Tax Guide to learn about how much to deduct. If you have a retirement plan, the money that goes into that will also count.

Ensure that you list each deduction separately so that you know exactly how much is going into each. You’ll use these deductions to come up with your net pay.

Net pay is how much money you take home at the end of the day after deductions are applied. Simply subtract the deductions from your gross pay and that number is your net pay.

Start Making Employment Pay Stubs Today

After reading this article, you know how to make employment pay stubs for your business. It’s best to start making pay stubs as soon as possible to ensure your business is meeting compliance. You’ll also make it easier for employers to file their taxes and monitor their wages.

The only thing you’ll need to do is figure out what you’ll use to make them. After that, you can make a template and start filling out the information to provide to your employees.

Browse our other articles to learn more about business-related topics like this.

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