You probably have a lot of things on your mind as the owner or manager of a company. However, payroll is one thing that should not be stressful if you follow this guide. Payroll is vital to any business’s success, but ensuring employees are paid correctly can be challenging. By providing employees with accurate paystubs, you will ensure they remain happy with their jobs and feel comfortable receiving their paychecks each week.
Create the Employee Record
The employee record is a document that tracks all the information about an employee’s pay. The employee record is a legal document; as such, it should be distributed to every company worker every three months. The employee record also serves as a tax document, which means that if you use payroll software like Gusto or Zenefits, you will not need to create your own separate pay stubs since they’ll already have that functionality built in.
The employee record contains all of the following:
- Employee name and title
- Employment date (the date that employment started)
- Hours worked (the number of hours worked)
Fill in the Employer’s Name and Address
On the first line, fill in the employer’s name, address, and phone number. The address must be real, not a PO box or email address. If you use blank pay stubs to print and use yourself, you can use an off-site location for your business (such as your home). However, if you’re working for a company that pays its employees via checks, ensure that this information matches what is on their tax documents.
Your employer’s name must be spelled correctly to match their financial records. This includes ensuring that all names used—first and last name—are spelled correctly too!
Enter the Employee’s W-2 Information
When you open the Employee Data tab, you’ll see a screen that looks like this:
- Enter their tax identification number (TIN) in the TIN field.
- Click on each row to enter information about federal income tax withheld from your employee’s paychecks and other sources of income, such as tips or bonuses received. By clicking on each of these rows, you must also enter state and local taxes withheld from your employees’ paychecks.
List the Pay Period and Check Date
You’ll want to list the pay period and check date. The pay period and check dates are the same if your employee is paid on the first of every month. However, if an employee has a two-week paycheck cycle by design, you can use the first day of their pay period without mentioning it in this section.
If an employee has a two-week paycheck cycle by design but gets paid on Fridays, list both dates separately: Pay Period Start Date (1st) and Check Date (Friday). Or if you have more than one person who gets paid on different days of their pay periods—says, biweekly—then list all of them together: Pay Period Start Date (1st), Check the date (2d), etc until you’ve listed all applicable employees for that particular pay period.
Insert Salary Information
When creating pay stubs, it’s important to include several different types of salary information:
- The employee’s gross wages are the total amount earned during the period in question.
- Net wages are the sum after taxes have been taken out of each paycheck (this will be slightly lower than gross wages).
- You should include an hourly rate and overtime rate if applicable.
If your employees are paid on a commission or piecework basis, those rates should also be included on their pay stubs. Another important thing for employers to note when drafting their employees’ pay stubs is how many hours they’ve worked during each pay period; this can help determine whether or not they’ll need additional funds from their employer to cover expenses like health insurance premiums and retirement savings plans like 401ks or 403bs.
Provide Details on Bonuses, Tips, and Other Earnings
Your pay stubs should include all bonuses, tips, and other earnings details. This includes:
- Total earnings
- Gross pay
- Taxable pay
- FICA (Social Security and Medicare) withholding amounts
When looking at the box for “other” deductions, make sure that you list any taxes that you deduct from employees’ checks. For example, if your employees are covered by a retirement plan such as a 401(k), this information will be included in their W-2s and can’t be duplicated on their pay stubs. However, if other deductions like life insurance premiums or union dues aren’t included in their W-2s, these should be listed here.
Include Employee Paid Taxes
Suppose you are included in making pay stubs for your employees. In that case, you should also include their Social Security number, your company’s social security number, federal income tax withheld (including Additional Medicare Tax), state income tax withheld, and Medicare tax withheld. This is important because it allows you to calculate deductions such as health insurance premiums or any other deductions that may be taken from an employee’s paycheck.
Input Company Paid Taxes
Taxes represent the amount of money you pay to the government based on your income. Tax deductions are amounts that can be subtracted from your taxable income and reduce the tax liability.
Taxes are calculated by looking at (1) gross income and (2) taxable income. Gross income is all of your earnings before any deductions or exemptions. Taxable income is gross income minus allowable tax deductions such as charitable donations, IRA contributions, and other allowable deductible expenses.
There are two types of taxes: direct taxes (like Social Security taxes) and indirect taxes such as sales or value-added tax (VAT). The U.S has both direct and indirect federal taxes, while most states also have their direct state taxes in addition to having a state sales tax on top of federal sales tax.
Insert Company Benefits and Deductions
If you’re deducting money from your employees’ paychecks, it’s important to let them know what those deductions are. In addition, employees should be aware of how much they can expect to take home each payday, and any changes in their deductions should be communicated as early and often as possible.
As a general rule of thumb, it is considered a deduction if you’re taking money out of an employee’s paycheck for any reason other than federal or state taxes. As such, there are two ways an employer can make deductions: a fixed amount or percentage of the employee’s total pay. Deductions may also vary based on the company’s income level or job title.
Take your employees’ pay stubs seriously since they are legal documents.
As a business owner, you may be tempted to take your employee’s pay stubs less seriously than you should. But they are legal documents and are important for many reasons.
The pay stub should accurately reflect an employee’s wages at your company. If they don’t, this could lead to problems with tax filings and benefits—plus, it can harm morale in the workplace.
Conclusion:
The pay stub is an important document that can help you stay on top of your employees\’ paychecks. It also helps them track how much money they have received throughout their employment, which is why it is so important to ensure that these documents are accurate and up-to-date. If you follow these steps when making your pay stubs, you will be able to ensure compliance with the law while saving time and resources. When you get more services, visit our site: https://stubsondemand.com/.
