Essential Steps to Follow When Making Pay Stubs for Your Employees
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. Although the federal law does not dictate that pay stubs be made and presented, there are a number of states that require that pay stubs be presented within 24 hours of the employees pay date. A number of employers always find it very difficult to make pay stubs for their employees simply because they do not have the know-how 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.
First things first, it is important for you to always determine the gross income of all your employees one by one. This can be achieved by ensuring that you determine the number of hours that particular employee has worked and then you multiply the number of hours with the standard rate of pay. Another thing you may want to consider when calculating gross income is the overtime hours the employee has worked. Multiplying the number of hours, the employee worked overtime by 1.5 will give you the total amount of money you will be paying that particular employee for overtime work. The gross income of your employee will be the sum of two multiplications you’ve done.
The next step should be calculating the deductions to be made on the gross income of employees. 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. This can be achieved by ensuring that you multiply your employees’ gross income by 0.062 and for Medicare it is important that you multiply your employee’s gross income by 0.0145. 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. It is essential for you to ensure that you include the name of company, employees name and your Social Security number. Click here