Are you wondering how to make pay stubs for your contractors or employees?

Although they are not required by Federal law, pay stubs delivered within 24 hours of the pay date are mandatory in some states. Making a pay stub is pretty straightforward and can help your employees when they file their taxes or apply for a mortgage.

We’ll walk you through the steps involved in creating an employee or contractor pay stub. It’s easier than you think!

1. Calculate Gross Income

The first step toward generating a pay stub is to calculate the employee or contractor’s gross income.

Take the number of hours that your employee worked and multiply that by their standard rate of pay.

To calculate overtime, take the overtime hours and multiply them by 1.5. Add the two figures together and you have the gross income figure that you need for a pay stub.

If there are any garnishments or deductions for unpaid time off, don’t take them off just yet. You’ll do that at the end of the next step.

2. Calculate Deductions

While many contractors do not have any taxes or deductions taken out, regular employees will.

Take out Federal, state, and local taxes according to your employees withholding rate. You can find the exact figures on the IRS website.

Next, deduct for Social Security and Medicare. To do this, multiply the employee’s gross income by 0.062 for Social Security and by 0.0145 for Medicare.

Employers are actually required by law to match the Social Security and Medicare deductions.

Remove any wage garnishments or unpaid time off, and move on to the next step.

3. Calculate Net Pay

Any income that is left after you make the above deductions is considered net pay.

You’ll want to find a good independent contractor pay stub template so that your contractor has a consistent record of their earnings.

You can find a good paycheck stub maker online. It’s important to use the same one consistently so that your employees or contractors have a paper record of their income.

It’s important to include the name of your company, your employee’s name and Social Security number, and the dates of the pay period and check.

Next, list their hourly rate of pay and the number of hours they worked during the specific pay period.

Finally, make sure to list all deductions and year-to-date figures for income and withholding.

How to Make Pay Stubs Easily Online?

It’s important to find a good pay stub generator, but if you’re wondering how to make pay stubs in-house you can also use an Excel spreadsheet.

Just make sure that you include all of your company’s information. A half-done pay stub is worse than no pay stub at all.

The good thing about using a pay stub program is that you can calculate rates of hourly employees who depend upon tips, like taxi drivers and waiters.

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