One of the basic requirements of applying for mortgage or being able to file tax is that you have to present your pay stub and this is the reason why quite a number of employees as supposed to have a pay stub. The responsibility of making pay stubs rests on the shoulder of the employer. Even though it has been realized that the federal law does not require pay stubs, as an employer you need to understand that there are some given states that will require that you produce employees pay stubs on that very day you are paying them. Some employers find it very hard for them to come up with quality pay stubs for their employees and one of the reasons why this is so, is that they do not have the knowledge on how to go about it. Highlighted below are some of the steps you can use to ensure that you make good and quality pay stubs for your employees.
To begin with, you should ensure that you generate your employee’s gross income first. The best way to achieve this is by finding out the number of hours an employee has worked and then you multiply it by your rate of pay in which in your case is the standard rate of pay. Another thing you may want to consider when calculating gross income is the overtime hours the employee has worked. The next is to take the number of overtime hours and then you multiply it by 1.5. When you are the two amounts that you have obtained, you will come up with the gross income of your employee.
What you need to do next is to try and do a calculation on the numerous deductions. It is important to understand that each employee has a different withholding rate and they are obligated to pay tax hence, you should ensure that you deduct tax in accordance to employees withholding rate. It is important to note that the law requires that all employers match social security and Medicare deductions and therefore you should ensure that you make these deductions on your employer’s gross income. Obtaining the employee’s deductible amount for Social Security is very easy because all you need to do is take 0.062 and multiply it by the employee’s gross income and then take 0.0145 and multiply it by employee’s gross income to obtain the deductible amount for Medicare. You need to understand that the amount of money that will be left after deducting the deductions highlighted will be the net income of your employee. Some of the things that are required when making pay stubs for your employees is the name of that particular employee, Social Security number as well as the name of your company.