What is a pay stub? A pay stub includes information both employers and employees can use and they are essential to your small business.
You just started your own small business and have hired actual employees. Congratulations! Now comes the time where you need to pay them.
You may be asking what is a pay stub?
A pay stub is very important for you and your employees and there’s lots of information on them that are essential for your small business.
Keep reading these five reasons why pay stubs are crucial to your small business and the easiest ways you can get them made.
1. What is a Pay Stub?
A pay stub is the part of your employees’ paychecks that shows the details of what the employee has earned. It will breakdown the current pay period, year to date payroll and show the employee’s net earnings.
It will also show the taxes and other deductions taken out of the paycheck. Your employees can receive their pay stubs either electronically or printed. Either way, they will need them for a variety of reasons.
2. What Should You Include?
There are a few important parts to every pay stub. The first is gross wages. These are your employees’ wages before any of the deductions have been taken out.
There are two different ways to find your employees’ gross wages depending on if they are salary or hourly. For salary workers, you divide the annual salary by the number of times they will be paid in a year. For hourly workers, you multiply their hourly rate by the number of hours they worked in a week.
This will also need to be separated into two columns, one showing their gross pay for the current pay period and one showing their year-to-date totals.
Another important detail to include in your employees’ pay stubs is how many hours they worked during that pay period especially if they are hourly workers. You can also include how many hours a salaried worker has worked but it isn’t as important.
You should also include their hourly pay rate for hourly workers and if they received any overtime or double-time for that pay period.
It is important to include all of these details on a pay stub so your employees will have a detailed list of what they’re getting paid for.
3. Taxes, Deductions, and Contributions
Taxes, deductions, and contributions should all be shown on your employees’ pay stub so they can see the amounts taken from their gross pay.
This should also be separated into two columns to show what was taken from the current pay period as well as a running total for the entire year.
You will also want to separate IRS and state tax into their own lines. This will help you and your employees see what was taken by the government.
You may make contributions to your employees 401K and this should also be listed in its own separate line.
4. Your Employees Will Need Their Pay Stubs
There are many reasons your employees will need their pay stubs and this is why it is crucial to provide them.
Your employees will need pay stubs if they want to rent a house or apartment. They will need to prove that they are making a reliable income to a landlord or management companies.
Or if they are in an accident and need proof of their income for compensation, then they will use their paystubs.
5. Make Pay Stubs Easy
There are many different programs and software to help you make pay stubs for your small business fast and easy.
For example, https://www.paystubcreator.net/ lets you input all of your pay stub information and create a quick and easy pay stub that can even feature your company logo.
This service is great if you do not have a lot of time to create your own pay stubs.
Don’t Forget the Pay Stub
Running a small business can be challenging but there are certain things that can make your life much easier.
What is a pay stub? A pay stub will help you and your employees understand what they’re getting paid each pay period.
Leave a reply below and let us know if you plan to make pay stubs for your small business and how convenient they are.
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