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If you have hired staff in your organization, you will need to compensate them for hours worked. Depending on the state laws, you may have to provide your employees with pay stubs at the end of a payment period.
Even when it may not be a legal requirement, providing your employees with pay stubs helps them verify that they are getting paid for what their time spent at your organization is worth.
If you consider creating pay stubs for your employees necessary, this guide can offer you some insight into doing things right.
A pay stub is a document an employer issues to their employees detailing their payment details per payment period – weekly, bi-weekly, or monthly.
This document aims to help employees understand their wages, contributions, deductions, and taxes. Besides helping employees ensure they were paid correctly, pay stubs often come in handy during personal loan applications.
How to Create Pay Stubs Using Online Tools
Making pay stubs for your employees can be taxing, especially if you do it manually and have many employees. But you do not have to do it manually. There are countless online paystub generators on the internet that you can use to generate pay stubs for your employees in minutes.
But you may not want to trust every paystub generator on the internet, considering the sensitive information used to create a paystub. If privacy and security are a concern to you, FormPros is one of the safest online paystub generators you will want to try.
What Information to Include In a Paystub?
A pay stub must indicate an employee’s general information, including their social security number, name, address, and contact information. Also, it has to show the employer’s address and name.
Because of the sensitive nature of this information, you have to be careful with the company you entrust with preparing paystubs to ensure your employee’s privacy is not compromised.
The paystub must indicate all pre-tax wages (gross wages/income). This is the total amount earned by your employees before tax and other deductions. You arrive at an employee’s gross wages by multiplying their work hours by their rate per hour.
If you have exempt or salaried employees in your organization, their gross pay per pay period will be their yearly wages divided by the number of payment periods.
Gross pay represents your employees’ cumulative earnings. However, they don’t get to take the gross pay home. There are some deductions that an employer withholds on behalf of the federal and state government.
Some possible deductions include federal and state taxes, employee benefits such as health insurance, retirement benefits, wage garnishments such as child support, and voluntary deductions. All this information must appear on the pay stub.
Every employer must make some statutory contributions on behalf of their employees. These contributions include the statutory employer portion of employee retirement benefits and the federal insurance contribution act.
Although you will be making the contributions, you must include the information on the pay stub.
The net pay represents the money that gets into the employee’s hand or bank after all deductions. You arrive at the net pay by deducting all statutory, voluntary, and wage garnishment deductions from the gross pay.
Whether or not your state rules demand you provide your employees with pay stubs at the end of a payment period, it is always good to issue these vital documents. They help give your employees an insight into what they make, their statutory deductions, and your contributions.
This insight creates a sense of transparency in your dealings with your employees, which is an excellent way of boosting employee morale. Also, your employees can use pay stubs as proof of employment when seeking loans for personal development.