How to Make Paystubs and What Goes on One

Are you looking to create a paystub for your employees, but aren’t quite sure how to do it? A pay stub allows you to show your employees their earnings and their tax deductions. 

In fact, many institutions require that you issue pay stubs as proof of income. Additionally, pay stubs allow both you to keep track of your business expenses, and they allow your employees to keep track of their earnings. 

But, how do you create a pay stub?

Check out this guide to learn how to make pay stubs and what goes on one. 

How to Make Pay Stubs 

You can either make pay stubs manually or use an online pay stub generator. Using an online pay stub generator is always a better idea, as it reduces the margin of error and allows you to automate certain details to help save time. 

To create an employee pay stub, you first need to figure out your employee’s gross pay. If your employees are salaried, this is easy, as all you need to do is divide their annual salary by the number of paydays per year. 

For example, if their annual salary is $52,000 and there are 52 paydays per year, then you just need to divide $50,000 by 52 to get their gross pay for the pay period. In this case, the gross pay would be $1000. 

Once you have this amount, then you need to calculate their deductions. First, you’ll need to take out money for federal taxes. The amount you take out of each employee’s paycheck for federal taxes will depend on the employee’s marital status and whether or not they’re the head of the household. 

You’ll also need to take out Social Security and Medicare taxes. To calculate the amount you need to take out, multiply each employee’s gross pay by 1.45% for Medicare and 6.2% for Social Security. 

You may also need to take out money for 401(k) contributions, retirement, and insurance. The amount that remains after all of these deductions is what will appear on the employee’s paycheck and what will go into their bank account. This is known as net pay. 

What to Include in a Pay Stub 

There are some other things that you need to include in a pay stub in addition to everything mentioned above. This includes:

  • Wage Garnishments: This is when you withhold a certain amount of money from an employee to help them pay off their debt. An employee chooses whether or not they want money deducted for wage garnishments. 
  • Back Pay: This is money withheld in the event that an employee owes the company money
  • Personal Information: Each pay stub should also include the employee’s full name, address, and employment status
  • Union Dues: If your employee is a member of a worker’s union, then you’ll need to deduct their dues from each paycheck

Once you have all of this information, the pay stub will be ready to go. 

Are You Ready to Make Pay Stubs? 

Now that you’ve read this guide, you should be ready to make pay stubs. By generating accurate pay stubs for your employees, you’ll be able to run a more efficient and organized business. 

Be sure to check back in with our blog for more business finance tips and tricks.