If you are a business owner with employees, you spend time each pay period processing payroll. Whether you have one or two employees or many more, payroll can be a time-consuming task if you’re trying to complete it manually.
By KEVIN DEVOTO
Using software or a template to generate pay stubs can help you work more efficiently when processing your company’s payroll.
Overview of a Pay Stub
Paper paychecks traditionally had perforated stubs or sections that the employee tore off and kept for personal records. Now, especially with direct deposit payments, pay stubs can be digital documents that explain the details of a paycheck. Pay stubs have information like:
— Tax deductions
— Social Security and Medicare deductions
— Number of hours worked
— Overtime, if applicable
— Accrued sick leave, if required
— Health insurance and retirement plan deductions
Employees use pay stubs to see what they’ve earned and how their paycheck is allocated. Employers use pay stubs to keep records of hours worked and wages for payroll taxes.
How To Generate Pay Stubs
Not every state requires employers to provide pay stubs to employees, but it can be in your best interest (and theirs). Pay stubs are an excellent way of keeping records, and when it comes time to prepare for taxes, you have itemized information ready to go. Employees may also need pay stubs as proof of income when they apply for a loan, buy a home or rent an apartment.
Employers have many options for creating pay stubs. Some state websites offer free templates you can use. You can also find online companies with templates available for a small fee, while others provide templates you can use at no cost. If you prefer to make your own, you can look at a few examples as a guide and then build a pay stub template Excel or a similar spreadsheet program.
If you use accounting or payroll software, you probably have a pay stub generator built into the software package already available to you.
What To Include on a Pay Stub
The pay stub should identify the employee by name, address, employee ID and a partial Social Security number (with the rest hidden for security purposes). It should also indicate the pay period, whether it’s weekly, biweekly or monthly.
Hourly employees should have the number of hours worked listed on the pay stub. All employees, salaried or hourly, should have the gross pay listed as well. Gross pay is the amount the employee makes before deductions such as taxes. Gross pay should include any bonuses or tips earned beyond the hourly wage or usual salary.
You can itemize deductions like taxes, 401(k) contributions, wage garnishments and health insurance premiums on the pay stub.
The amount the employee receives after deductions is the net pay. It should also be listed. For an overall financial picture, it’s a good idea to include year-to-date totals of all categories.
Employee time off, such as vacation, sick time and personal time, can also appear on the pay stub. These figures will give both you and your employees an overview of what they have used that year.
Benefits of a Pay Stub Generator
Using a pay stub generator can help you create professional pay stubs that contain detailed and accurate records. They can help you with calculations, thus saving you from costly payroll errors.
Pay stub generators can provide your state’s tax requirements, keeping you up to date on ever-changing regulations. Pay stub generators provide you with archives of payment history for all of your employees, past and present. If you’re running a business and completing payroll yourself, you can streamline your payroll process and save time, freeing you to allocate those gained hours to increased productivity.
If you aren’t creating pay stubs for your employees already, you may want to consider starting them on your next payroll. You can try a free pay stub generator and see how it works out for your payroll process.