Missing something that goes on a pay stub is a grave mistake as an employee. Keep reading for your very own pay stubs template.
One of the most difficult things for new business owners to figure out is the art and science of payroll. Make no mistake — figuring out everything you need to do to pay your employees on time and with the right information is no easy task.
That’s why we’ve written this article. If you don’t have any payroll or accounting experience but still need to head up this task for your business, never fear. In this post, you’ll learn what goes in a pay stub and how to use a pay stubs template to make the process much simpler than you might have thought possible.
Calculate Gross Pay
The first thing that needs to go on a pay stub is the gross pay that the employee earned in the pay period. If the employee is paid on a salary basis, then gross pay will be equal to the annual salary divided by the number of pay periods in the year, plus any incentives or commissions that you pay them.
If the employee is paid hourly, then you want to list the number of hours worked that pay period (regular and overtime), and then multiply the regular hours by their hourly rate and their overtime hours by their hourly rate and by a multiple of 1.5. Sum those two products to get gross pay.
Once you have gross pay calculated, it’s time to take out withholdings. You will need to take these out to pay federal and state income taxes on your employees’ income.
Make sure that you have all of your employees’ documentation gathered beforehand. The last thing you want to be doing is running around at the end of the pay period trying to figure out how many deductions your newest employee wants to claim.
Calculate Net Pay
Once you have gross pay and total withholdings, simply subtract the latter from the former to calculate the net pay that the employee should receive. This is the amount that you’ll wire to them in direct deposit and the amount you should display at the end of the pay stub.
List Contact Information
Another crucial part of your pay stub should be spaces for contact information. You want to put down contact info for your business’s payroll department (or yourself, if you are the payroll department) so that your employees know who to contact in the event of a pay dispute.
Leverage a Pay Stubs Template
Leveraging a pay stubs template will prevent you from having to start from scratch every pay period to build out your pay stub format. Use a software tool like www.paystubs.net to find the right template for your business.
Putting It Together
There you have it — now you know what to put on your pay stubs as well as how to use a pay stubs template to make payroll infinitely easier for your company.
For more business advice, be sure to take some time to check out the rest of the articles available on the website!