Death and taxes are the only things certain in this life. This means, as a small business owner or freelancer, you need to be on your game financially.
Every year approximately 33 percent of employers make payroll errors. In fact nearly half of all small businesses sustain losses of $845 in IRS penalties because of payroll errors.
To avoid penalties and payroll problems, you need help. A pay stub software creator can help you create the pay stubs you need to help keep track of what you’ve earned and what you’ve paid your employees.
Keep reading to learn everything you need to know about a pay stub software creator.
What Is On Your Pay Stub?
A pay stub should include more than just the amount an employee receives. If you want a thorough record of what the employee has done, you need the following information:
Gross pay: This is the money you have earned before your employer takes out any taxes, Social Security, Medicare, insurance, or retirement. It’s what you would take home if you did not have any withholdings. Your gross pay is what the employer advertises your job as paying.
Federal taxes withheld: Your pay stub should state how much federal tax your employer is withholding. This all depends on your tax bracket. The U.S. has a graduated scale starting at ten percent and then increasing to 37 percent.
State taxes: If your state has a personal income tax, the pay stub will indicate how much is being withheld. Some states use similar tax rates to what the IRS uses, while others have a flat rate.
Local taxes: Bigger cities will have their own local taxes. New York City, for example, has its own local taxes that pay for government services.
Benefits: If you work for one of the 90 percent of large and medium-sized businesses that offer health benefits, your paystub should reflect the deductions. They should have health, dental, vision, life, and disability insurance deductions listed.
FICA: When you see FICA on your paystub, this means you’re contributing to the national pension and old-age health insurance fund, also known as Social Security and Medicare. FICA stands for Federal Insurance Contributions Act.
Retirement: If your employer offers a pension plan and you contribute to it, the contribution should be itemized on your pay stub. This includes 401k, 403b, and company pension plans.
Wage Garnishments: If you’re currently having your wages garnished, such as for an unpaid tax bill or unpaid child support, the wage garnishment will show up on your pay stub.
Back Pay: If your employer owes you, the back pay should show up on your pay stub. For example, if your employer is adjusting your salary mid-pay period, you will see the change on the pay stub.
Net Pay: At the end of the pay stub, you will see your net pay. This is what you actually take home after all of the previous items are deducted from your gross salary.
Your pay stub should also include the beginning and end of the pay period. This little piece of paper should explain why you received the paycheck you received. It basically tells a story.
Why Use a Pay Stub Software Creator?
As you prepare to file taxes for your freelance work or your small business, you will quickly discover you need specific financial documents that you need to generate yourself. When you do not have a single employer, you need to make your own pay stubs.
This is where a pay stub software creator comes in. You can create your own pay stub or pay stubs for your employees with some simple software.
You have a few different options when it comes to a pay stub creator.
First and foremost, if you’re not generating a ton of pay stubs, you should check out online pay stub generators. Often they’re free with the first use.
Free online pay stub creators do not have the bells and whistles of paid versions, but they can generate basic pay stubs. They work well for small businesses or if you process payroll on your own.
You can find paid versions of pay stub creators online as well. Some will have luxuries like giving you the ability to toggle between hourly and salary employees. Sometimes you can even view the stub and download it as a pdf.
Paystub generators that you pay for will cost you as low as $8 per pay stub. Some online pay stub makers will allow you to have unlimited access for a monthly fee.
As you look at companies, look for something with a 100 percent money-back guarantee if you’re not satisfied. Also, look for a company with 24/7 support.
Why Not Outsource?
You might find yourself tempted to outsource your entire payroll operation. There are companies that will run your payroll for you. If you’re overwhelmed with your business, then a payroll service may work for you.
However, be aware that when you hand your books over to another company, you’re handing over a serious amount of trust as well. If you’re looking at a payroll service, be aware of the risks you’re taking.
Customer Service: You need a company with superior customer service for you and your employees. Their work represents your work.
Technology Woes: The company needs to be using the most up-to-date technology trends. If they’re stuck in the twentieth century, they cannot process payroll efficiently.
Security: You have to ask yourself if your information is safe with this company. You are sharing sensitive data with a company most likely targeted for data breaches. Make sure the company has round-the-clock security and has a disaster recovery system in place.
Liability: If someone makes a mistake on payroll, who is responsible? Make sure you aren’t held accountable for another company’s mistakes.
Keep It In House
As your business grows, continue to stay fiscally responsible. Use a pay stub software creator to generate thorough pay stubs.
For all your pay stub needs, get them all sorted out with an online paystub maker!
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