It may come as a surprise but, no, it isn't a federal requirement to provide employees with pay stubs. This changes on a state-by-state basis, though.
The gist is this: do it anyway for employees and your accounting.
Distributing a pay stub is a best practice as it provides proof of labor or services. Employees often need stubs when filing taxes, applying for loans, and the like. Companies you do business with will want them for record keeping, too.
It's quite easy to learn how to make a pay stub. You can create these on your own using a template. Or, create pay stubs with the aid of a tool.
Keep reading to learn the step-by-step, pay stub creation process.
Pay Stub Creation 101: Step-By-Step
The old way to create a pay stub is tallying the numbers and writing the information on standard paper. You can get fancy with this process with branded paper. Or, using fraud- proof, business checks that feature a side stub.
Today, you'll likely use a pay stub template and how to make a pay stub for an employee overall.
Here is how the pay stub process works:
1. Gather The Employee's Information
Contact HR for this information or pull the records yourself -- you'll need:
• Employee details: Name, Social Security number, and address
• Payment details: Pay period, gross earnings, and pay rate
• Tax details: Withholdings, contributions, deductions, and garnishments
You may also want to note:
• Salary vs. hourly
• Fixed vs. varied schedule
• Employee or contractor
You will now crunch the numbers when creating the pay stub.
2. Calculating Employee Pay, Deductions, And More
Begin by calculating the employee's gross earnings:
• For salaried employees: Annual salary ÷ paydays per year
• For hourly employees: Worked hours × hourly rate
Calculate any overtime (1.5× rates) and add this to the total.
You will now calculate deductions:
• Employment taxes: Refer to the IRS/state-level tables
• FICA (Social Security and Medicare): 6.2% and 1.4%
• Contributions: The agreed upon amount
Subtract the deductions from the gross earnings and you'll have the net pay.
3. Create The Pay Stub
Take the employee's information and import it into a pay stub template. These are available through template marketplaces. You will:
1. Open the pay stub template in a text editor
2. Fill in the employee information and details
3. Confirm and print the pay stub (plus copies)
Hand the pay stub to employees and you're all done! As you can see, the process is quite easy. The process goes faster after creating employee templates.
How To Make A Pay Stub: The Easy Way
Don't want to crunch numbers and use downloaded templates?
Consider using a paystub generator. These handy tools let you input data and autogenerate pay stubs. You'll save time while avoiding fat-fingering information or doing the wrong calculations.
The digital pay stub generators also offer easy backup and distribution. This is a great option for employers with contractors around the globe.
Managing Your Expenses And Making Employees Happy
You can learn how to make a pay stub or use a simple generator. Either choice works and is a great practice for record keeping and payroll from the HR department.
Creating a pay stub is but one way to save money in business and payroll. Check out some of our other payroll money-saving tips in this guide to business budgeting.
