If you’re a business owner, you probably think that making a paystub is a daunting and time-consuming process, which can be true if you’re making it for the very first time. However, by ensuring that you know what necessary information you need to include, as well as how it’ll need to look like, you could make the entire process easier.
This is why you might be wondering – how can I make these documents? Fortunately for all business owners that will need to make these documents, the article below is going to shed some light on how to make pay stubs for your business. So, without further ado, let’s take a look at the steps you’ll have to take:
Step 01: Before Anything Else, Know Your EIN
One of the first things that you’ll need to do is setting up your EIN with the IRS. This is a number that identifies your organization, hence, if you’re a new company, you should apply for this number. Applying for it is completely free, hence, you can choose to send your form online or mail.
Keep in mind, the easiest way to apply for it is if you send your form online, however, it’s possible that you also apply by mail, fax, and in some cases, your phone, however, it might take more time for you to receive the number. Additionally, don’t forget to check with your local government about tax ID numbers.
Step 02: Gather Info on Employee Tax
When you’re done obtaining your EIN, you’ll have to gather tax information from your workers. This will require them to fill out two forms – the I-9 and W-4. These forms will provide you with different information, including their working status, specific deductions, and so on.
Remember, without this data, you won’t be able to create a paystub, which means that you must ensure that you follow all the rules and regulations when you’re submitting the forms. If you have freelancers working for you, they’ll need to fill in the 1099s, which is a bit different than the other forms, hence, ensure that you see a pay stub example of it, in order to see what it looks like.
Step 03: Opt For a Payroll Schedule
If you have gathered all the important information you’ll require, you’ll need to decide on when you’ll pay your employees. There are 4 types of schedules you can choose – weekly, one in two weeks, two times a week, and once a month. Keep in mind, this is something that you’ll want to consider carefully, especially since you don’t want your workers to go without pay for a long time.
Step 04: Learn What The Gross Pay is
Learning and calculating the gross pay is the first thing that’ll help create a paystub. Though you might think this is difficult, it’s actually quite easy. Basically, gross pay is the number of hours a specific individual has worked for you, which is then multiplied by the hourly rate.
For instance, if a person has worked for 70 hours in your biweekly payment schedule and his or her hourly rate is 12 dollars, you’ll have to multiple 80 hours with $10. Hence, their gross pay would be $840. Using software will help with these calculations and you could also use a paycheck stub maker that you can find online.
Step 05: Keep an Eye on The Deductions, Allowances, And Other Info
In order to properly generate a paystub, you’ll have to determine each worker’s allowances and deductions. Allowances and deductions are basically the same things and they’ll imply how much funds have been taken out of your paycheck annually. Now, allowances are specified on the forms your workers filled in, but, deductions are specified by the workers on their 1040EZ form.
Besides this, there might be some other things that you might need to include in the paystub, including Federal/State/Local taxes, social security, medicare, compensation contribution, as well as any other factor that you must include. This is something that can be time-consuming, however, if you store all your data properly, you’ll be able to make this process easier.
Step 06: You Need to Calculate The Net Pay
When you’re done with the aforementioned step, you’ll need to subtract the amount from the employees’ gross pay, which is something that’ll look like: gross pay – all the deductions = the net pay. This is basically what the employee will be paid during a specific period of time, which is data that you should ensure that you keep, especially since it’ll make things easier for you.
Once you’re finished with the calculations, you should use online software such as paystubsnow.com that’ll allow you to create and add all the information to a paystub. Now, these programs might cost you some money, however, it’ll make everything easier for you, mostly because it’ll take you less time to complete these steps.
Besides making things easier for you, it’ll also allow you to send the paystub in different forms, which means that you could choose to send them via mail, email, checks, or you could even opt for direct deposits and money cards, but, this will depend on your preferences and needs. You should ensure that you implement an automated system, especially since this will allow you to pay your workers on time.
Step 07: Always Keep The Records + Correct Errors on Time
You must ensure that you keep your paystub records maintained and organized at all times, mostly because it’ll allow you to view them anytime, which means that you’ll be capable of referencing the document whenever you need to. Besides this, you might need to work with the IRA in the future, and having these documents will make everything easier for everyone involved. Also, mistakes do happen from time to time, hence, ensure that you correct them as soon as you can.
As you can see, creating a paystub doesn’t have to be a daunting, complex, and time-consuming process. And, if you choose to follow all the steps we mentioned in the article above, you’ll certainly be able to make the process easier, less time-consuming, and more importantly, less stressful.
So, now that you have learned what you need to do in order to create a paystub, you really shouldn’t waste any more of your time. Instead, open up your browser, and start searching for a website that’ll help you with creating the documents you need in a matter of minutes.