Pros and Cons of Bi-Weekly Pay and How to Take Care of Your Money?

Dec 18th, 2023

Bi-weekly pay pros and cons are a matter of extreme viewpoint. One accountant’s preference can be another’s nightmare. Technically, bi-weekly pay schedule offers the employees and independent contractors the chance to receive paychecks more periodically.

The three-cycle pay is bi-weekly, which means that if you are paid bi-weekly and, you will get paid twice a month.

This blog will help you understand whether a bi-weekly pay schedule is a perfect fit for you. If you want to create paystub, then eFormscreator is your best choice. Let’s get started.

What does bi-weekly means?

Bi-weekly pay is known when the employees are paid every week on a particular day of the week.

How does Bi-Weekly Pay Work?

While choosing, you have two options available: the company’s accountant or the payroll department. They will pay every employee on a set day once every two weeks. For example, every Monday but, the day will be the same.

This translates back to two paychecks per month, but the firm may occasionally pay out three times if there are five Mondays a month. But, with bi-weekly pay, there are 26 paydays per year.

What separates semi-monthly from bi-weekly?

Semi-monthly and bi-weekly pay are often confusing. There is a vast difference between them, though. Semi-monthly is paid only twice a month, on the same day every month.

Compared to bi-weekly pay, there will never be more than two paydays in a single month, and the workers might anticipate receiving 24 paychecks annually.

Every two or three weeks, on the same day, bi-weekly pay can be made. If an employer chooses to pay semi-monthly, they may do this on the first or the fifteenth of each month.

The two payment systems are similar in distinctive ways:

  • Payroll generally needs to conduct two pay runs per month.
  • Only two weeks are required for employees to wait between paychecks.
  • Compared to paying employees on a weekly basis, both options might be more straightforward and less expensive for the company.

Moreover, having an assurance of a regular fortnight salary might help with budgeting throughout the holiday seasons, making sure times of the year are a little stressful when paid bi-weekly.

The main difference between both of them is the two payment schedules, which are that bi-weekly work well and have various advantages for hourly employees and those who work overtime.

Pros of Bi-Weekly Pay

1.The Perfect Way For Employees To Manage Their Finances

Receiving a stable increment in income can help employees keep a tab on their income and, therefore, help them budget accordingly. For this reason, bi-weekly pay is usually offered as a benefit to the employees- which could attract better employees to your team.

Below is how it can help the employees:

  • It can help them prevent overspending during the time between paychecks and help them avoid financial disaster.
  • This type of paycheck can present issues with debt management that might not afford the same flexibility as someone’s monthly schedule would for paying off debts.
  • More paychecks means that they might avoid late charges from utilities.
  • With bi-weekly paychecks, people are more likely to spend their money quickly on what they really need. With bi-weekly, people can better assess how much they need to spend on groceries for the next two weeks.

2. Precise Expenses Calculation For Your Business

Another potential advantage is that the bi-weekly payments can help to clear up issues that are related to business expenses and things such as taxes.

Since the taxes are generally taken out monthly instead of quarterly while using this type of payment schedule, there is a more significant possibility that you will miscalculate your budgeting for taxes and other expenses over money overall at the end of each period.

The two paychecks per month can help the individual save money on interest charges because there will be less time between payments. The end-of-month bonus check becomes voluntary income, which provides some relief from financial stress at the beginning of every month.

Cons of Bi-Weekly Pay

  • Overtime calculations might be daunting- it could be challenging to determine how much overtime income you should await since there are paydays each year.
  • Tax deductions and other deductions might be complicated. It’s simpler to determine the proper deductions evenly for each calendar month when paid semi-monthly.
  • Take home pay on additional months. There are two additional figures, and budgeting steps required to determine the take-home pay every year.

Conclusion

Bi-weekly pay is an excellent option for businesses whose employees are freelancing. These types of workers benefit from increased stability and the use of automated tools to generate invoices.
If you are looking for a paystub generator which is 100% free, you should visit eFormscreator to create paystub easily.

Advantages of a Semi-Monthly Pay Schedule

Dec 15th, 2023

A Semi-Monthly pay schedule is more like a monthly pay schedule, but the payments are split up between two payments, generally at the beginning of each month and at the middle of each month.

The end result is less money in a month, but it spreads out the money among the four months of a quarter. Ultimately, semi-monthly pay is the best-utilized payment schedule for most of the employees. If you are looking to create paystub then eFormscreator is your go-to tool.

It offers stability to the employees and consistency for the employers, and it improves the economy, providing various advantages that are easily not available with once-a-month payments.

In this blog, we will see the advantages of a semi-monthly pay schedule. Let’s get started.

Create Paystub For Independent Contractors

What Is Semi-Monthly?

A semi-monthly pay schedule means that the pay checks are generally distributed two times a month, usually on fixed dates like 15th or the 30th. However, they might not necessarily fall on same day of the week, and you would end up paying the employees 24 times instead of 26.

Advantages of a Semi-Monthly Pay Schedule For Employees:

By splitting up the money into two payments per month, hourly workers receive improved income stability and a better quality of life. Many people, upon receiving a massive amount of money, do not allocate it effectively in a way that affords them long-term results; splitting income up and whoever has the unintended side-benefit of forcing the people to think down more intelligently with whatever they have, and so the people generally tend to make better decisions.

Most of the semi-monthly pay employees use this improved stability to build upon their savings for any kind of emergency and other expenses that might arrive during the semi-monthly pay period.

Lack of worry about income leads to a more substantial financial situation for these employees, fewer financial worries and a promising career. Another overlooked reason behind the benefit is that a semi-monthly pay schedule means that there is a lesser risk of overestimating finances at the end of a pay period.

Understanding Your Pay Stub: All About YTD

Receiving two smaller sums per month in lieu of one large one helps you predict the income and lets you accommodate the changes rapidly. Employees with a demanding schedule might want to consider this type of arrangement in order to avoid the stress of manually managing the finances.

Semi-monthly pay lends itself well to deposit automation and allows you to build a more stable passive income stream via avenues like index investing. Semi-monthly pay provides an additional level of comfort and security for the employees because they receive a more consistent income, reducing stress and overwhelming feelings which are associated with managing finances.

Advantages of a Semi-Monthly Pay Schedule For Employers:

Semi-monthly pay is one of the best payment schedule option for a company.

Smaller companies, in particular, businesses usually have very little capital in hand to afford workers and often need a tangible ROI in two weeks’ worth of work to be able to continue hiring and offering pay.

As a result, semi-monthly pay schedule means that they are included in the month; instead, they can pay a smaller sum on a two-week interval, monitor for return on investment and make continued hiring decisions.

It simplifies the payment schedule for the general employee to recognize:

This is the most essential query you will generally find in the “When we are going to get paid next”? No matter whether you are an employee once a week or every other week. Those concerns are resolved once a semi-monthly system has been implemented because employees are paid on a regular basis.

How Long Should I Keep Pay Stubs?

It blends in with the other payroll methods:

It is possible to combine semi-monthly payment arrangements in order to meet the demands of both business and personnel effectively. You will discover that giant firms might have a bi-weekly pay schedule for full-time hourly employees, a weekly plan for part-time employees and a semi-monthly pay schedule for salaried personnel.

Cash Flow of the Business is Assisted:

This is valid when the benefits are paid attention to the agreed remuneration. The matchless superior is generally the one which is distributed on the Tuesday after the semi-monthly pay dates because it fairly removes all of your American banking holidays.

Problem with the Existing Odd Days and Leap Year Days is Solved:

Other payment schedules are coered to adjust the year’s odd-numbered days as well as the volatile leap year day. Because the framework is crafted to respond to those rapidly changing situations, semi-monthly pay can continue without being interrupted. The last business day of the month will either be on the 26th or the 29th and will serve as the final pay date for February.

Calculating Addition is Substantially Less Difficult:

The contracted benefits are simple to implement if the benefits are paid out twice a month. Simply divide the agreed sum by 24 to see how much will be distributed throughout each payroll cycle.

As a result, even when docility issues can be complex, a clear set of policies and processes can make even the most challenging pay period easy to manage for everyone in the firm.

How Can You Generate A Paystub and Calculate Wages?

Conclusion

A semi-monthly pay schedule is favorable for both employees and employers. It is beneficial for the employees because they can plan their finances and save money for the future. If you are looking for a free paystubs generator then you should visit eFormscreator.

How To Create Paystub For Independent Contractors

Dec 13th, 2023

Do you need to generate contractor pay stubs for your business? You have landed on the perfect page. Being an independent contractor, staying on top of the right side of the IRS is vital. Paystubs provide detailed information about your earnings, taxes, and employer-paid benefits.

In this blog, we shall provide a solid insight into independent contractor pay stubs and how to create paystubs for self-employed individuals.

It is challenging to manage your paperwork when you are self-employed. As compared to traditional employees, you generally do not receive a pay stub that showcases your earnings and tax deductions.

How To Get Pay Stubs for a New Apartment?

Knowing How To Read A Pay Stub

Understanding the difference between current and year-to-date figures is vital while reviewing a paystub. Both are crucial, and the YTD balances assist the firm and the employee determine whether the amounts are accurate.

A pay stub summarizes wages, tax deductions, and benefit deductions. On the other hand, independent contractors’ pay stubs have no deductions from their pay.

States have different laws governing pay stubs. Though some states mandate it, others do not. Employers are required to open up their wage information to employees. Businesses should check laws in each state where they have employees to ensure they are compliant.

As evidence of income, workers should save their current pay stubs. When someone requests a loan, the pay stub verifies their gross income.

How Can You Generate A Paystub and Calculate Wages?

Generating Independent Contractor Pay Stubs

Before we dive into the contractor pay stubs needs, let us discuss how employers typically address pay stubs and all considerations around this. A pay stub is a document that summarizes an employee’s wages and deductions for a given pay period. It can be used for various reasons like payroll tax calculation, reporting to government agencies like the IRS, and employee benefit tracking.

Employers use different methods to generate paystub. Some employers print out paper check stubs for their employees, while others print them out via an online portal, which they can access via an app. The decision to print paper stubs is based on how many employees are being paid each paycheck because it can be costly to print a vast number of copies simultaneously.

25% of U.S. adults report paying late for goods and services in the last 12 months, including 16% who took more than one month to pay their bills. Some might consider this a financial hardship that makes paying bills difficult, including lack of income or medical emergency.

Pay Stub Software/Tool

Many firms use software or tools like eFormscreator to generate paystub for their employee. It can be tempting to download one of these paystubs for your records but beware, it might fail to meet your expectations.

Employers must provide pay stubs in various situations: when employees request them or state law requires it.

The best way to generate a custom pay stub template is to write down everything you want on yours when you get paid- go back through each line and identify which line statements are taxable or non-taxable.

It is vital to know the name of your employer, the number of hours you have worked in the last week, your gross wage earned by you, and any kind of deductions made on your behalf.

How Long Should I Keep Pay Stubs?

Creating A Paystub for Independent Contractor

Since you work for yourself, you do not get a traditional paycheck. That’s okay. You can use a free online application to create your own pay stub.

Keep in mind these steps:

  • Decide your home state.
  • Choose whether the pay stub is for the employee or for you.
  • Insert your personal information.
  • State your company’s information.
  • Finish any remaining field if left.
  • Include any withholdings.

Once you select the template and provide the necessary information, you can download your independent contractor pay stub to generate a quick online payment.

W-2 Form or 1099 Paystub?

Watch out for your documents if you still need clarification. The form the employee receives from their employer is the W2 form. This contains annual compensation and provides information on tax deductions and health insurance. This contains annual compensation and provides information on tax deductions and health insurance.

The appropriate form for independent contractors is a 1099-MISC form. It includes the entire income you earned for the year without any deductions.

Step-By-Step Guide To Filling Out The W2 Form

Conclusion

An independent contractor paystub is vital to the modern tax system and includes in-depth tax data, contract information, and benefits. As an independent contractor, you must stay on top of your payments and pay stub information because they improve the likelihood of a strong, mutually beneficial relationship with the agencies and beyond. If you want to create paystub eFormscreator is the best choice to move forward with!

How To Get Pay Stubs for a New Apartment?

Dec 08th, 2023

If you are looking for a new apartment to rent, you will likely be required to show proof of income to your landlord. You can demonstrate this proof of income in various ways, the most common being a paystub.

If you want to generate paystub for yourself or your employees, use eFormscreator , the user-friendly tool. In this blog, we will make you understand how to make pay stubs for apartment. Besides this, you will also learn about the options you have to prove your income before you sign a lease. Let’s get started.

Why Use Paystubs as A Proof of Income?

Landlords generally want to see that your rent shall be at most 30% of your monthly income, so they ask you for proof of your income.

Pay stubs are the most basic method that renters shall show as proof of income to the landlords, as they are the most trustworthy method. A Pay stub proves your income and showcases how much earnings you are making.

Pay stubs and other verification forms show the applicant’s full name, employer’s name, and relevant contact information. They are usually the most up-to-date form concerning income that many employed people have.

How Long Should I Keep Pay Stubs?

How To Get Pay Stubs For A New Apartment?

Most renters can access their pay stubs, so it’s a flashy way to verify your income. If you have a direct deposit, you will likely have access to your pay stub online; otherwise, you can ask HR for a copy of the same. If you want a physical copy, ensure that you only present your landlord with a copy, not the original.

Renters should expect to provide you with two months worth of pay stubs. Presenting pay stubs for this period shows the landlord how frequently you are paid and how much you make per month.

If you are a freelancer or an independent contractor, you might not have a pay stub to present to the landlord—no need to panic. Depending upon your landlord’s request, you might have other options left to show proof of your income.

Other Options for Proof Of Income

1. Bank Statements:

Self-employed people do not receive a traditional pay stub and might not receive pay at regular intervals.

Providing bank statements from at least the past two months is an excellent way to show landlords that they have a regular income. Be aware that the landlords might also request more than two months’ worth of bank statements to show proof of income and steady income.

Bank Statements give landlords an idea of the applicant’s overall financial position and help them understand if the applicant can afford the rent.

Other alternative for a self-employed individual is to provide a 1099 form. It is a tax document; it is easily verified. However, you might need to offer more than one 1099 form to prove a stable income.

How to Fill Out Form W2 Form

2. W-2 Income Forms:

W-2 forms are reliable documents that provide the applicant’s income from the previous year. However, many of the landlords prefer W-2 forms as supplemental to pay stubs.

A W-2 might only sometimes be sufficient as proof of income as they do not give an up-to-date view of the renter’s income. A renter might have changed jobs in the past year, which the W-2 would not reflect. If you submit a W-2 form, your landlord might also request recent pay stubs.

3. Letter of Employment:

A landlord might request a letter of employment to confirm your employment status.

Some companies generate generic letters to detail your length of employment and salary. You might approach your manager for a formal, more personal letter, providing that landlord with proof of your character and serving as a positive reference.

Likewise, employment letters are easily forged, so be aware that the landlords might call our employer to verify the letter. Moreover, letters of employment take longer to obtain the other forms of proof of income, as your employer may need to create a new one.

Pay Stubs For A New Apartment

Having proof of income as a renter is vital to give your landlord peace of mind that you can make your monthly rent payments on time. As a renter, you have several options for proving your income and pay stubs are the most basic and reliable form.

However, pay stubs are not enough, so it is best to have multiple methods and documents prepared. Your landlord may request a secondary method to prove your income before accepting you as a tenant, so you should stay aware of the different ways that you can show proof of income to potential landlords.

How Can You Generate A Paystub and Calculate Wages?

Conclusion

Landlords can always ask the renter to show at least one document as a proof of income. To create a pay stub, you should use eFormscreator to save time and ensure the proper documents are ready.

Guide To Paystub Abbreviations

Dec 07th, 2023

Congratulations on receiving your monthly paycheck. Now you are stuck wondering what all of the abbreviations mean.

We have curated this blog for you to help you make sense of standard paystub abbreviations and what they mean for your monthly income and deductions. If you want a free-to-use paystubs generator, then you should check out eFormscreator.

Why Do I Need To Understand My Paycheck Stub Abbreviations?

There are several reasons why understanding the abbreviations on your pay stub is critical. In this section given below, you will be looking at some of the most important ones.

Understand Your Tax Deductions: Common pay stub deduction codes showcase taxes and contributions to different insurance programs. Understanding the abbreviations on your pay stub will help you figure out how these deductions affect your monthly earnings.

Check For Errors and Distortion: It is not uncommon for employers and payroll systems to accidentally withhold the incorrect amounts from pay stubs.

You will only be able to notice these irregularities if you understand what the abbreviations on your pay stub mean.

Errors include:

  • Amount of taxes paid
  • Unpaid Overtime
  • Inaccurate benefit

Understanding Your Pay Stub: All About YTD

Use Pay Stubs as a Proof Of Income

Pay Stubs are one of the most common ways to introduce proof of income:

  • Get a credit card
  • Apply for a loan
  • Get approval for a lease

When you know what the abbreviations mean, you can understand how they distribute your income.

Guide To Pay Stubs Abbreviations

Standard Pay Stubs Abbreviations:

Gross Pay: This is your full salary pre-tax deductions.
Net Pay: This is the salary which you will take home after all the deductions have been subtracted.
Federal Tax Amount: This is the amount that you will need to pay to the Internal Revenue Service each month.
State Income Tax: This is state-specific as not all the states have income-related taxes. State taxes are calculated via a percentage based on your income after deductions.

These taxes make up the state budget and are used to fund:

  • Healthcare
  • Garbage Collection
  • Infrastructure

Local Tax

This is the amount of tax you will pay to your local government. It is a requirement for some cities, countries and school districts.

Local Tax help fund Public Services like:

  • Police and Fire Departments
  • Libraries
  • Road Maintenance

How Long Should I Keep Pay Stubs?

Social Security

Social Security is a system of retirement, disability and other support programs set up by the U.S. government.

It acts as a form of financial insurance if something happens to you that results in you being unable to work.

Federal Law requires working Americans to contribute a portion of their wages to the Social Security Program every month.

Medicare

Medicare is a U.S. government program that provides medical benefits to Americans aged 65 and older. These include hospital and surgical benefits.

The law requires working Americans to contribute at least 1.45% of their gross income to the Medicare program.

Year-To-Date (YTD)

You can break YTD into two sections to showcase the employee’s total income and contributions during the year.. This includes:

YTD Gross: This is the total income that the employee has earned during the year before any deductions are made.
YTD Net: This is the total amount paid to the employee after their deductions. Employees need to ensure that their deductions are accurate.

Header Abbreviations and Codes

Social Security Number (SSN): This is the government-issued number which is used to report your wages to the IRS. You can also use your SSN to track your eligibility for Social Security benefits.
Check Number: Employers use this number to identify and track each paycheck for their company’s accounting records.
Employer Identification Number (EIN): The EIN is a number assigned to the business by the U.S. government and IRS. It also helps the IRS to identify the returns and employers.

How Can You Generate A Paystub and Calculate Wages?

Earnings Abbreviations

Let us take a closer look at some of the typical earnings abbreviations below:

Gross Pay: This is your total salary before deductions are cleared.
Net Pay: This amount showcases what you will take home after taxes and other deductions.
HR: Its full form is Hourly Rate. The law requires Your employer to pay their workers hourly wages, which is shown on the pay stub.
OT: Its full form is Overtime Pay. This showcases that the work is past an employee’s regular working hours.
Add Earnings: This section showcases additional earnings. It is used to report any income received over their regular salary.

Conclusion

In this blog, we have cleared all of your paystub abbreviations, and now you do not need to panic by seeing that jargon on your pay stub. If you want to create a paystub, use eFormscreator to be intact with a professional paystub.

How Can You Generate A Paystub and Calculate Wages?

Dec 06th, 2023

Managing a payroll process is complex, you need to generate accurate payroll data for your employees. Each worker needs to have a detailed paystub, to understand gross wages, and all the withholdings from the pay. If you are looking for free paystubs, eFormscreator will help you.

What is a Pay Stub?

A Pay Stub lists all vital information related to the employee’s pay. When you review a pay stub, it is vital to note the difference between the current pay period and year-to-date amounts. Both of them are crucial, as YTD balance helps the employer and the worker understand if the amount is correct.

The paystub provides information about wages, tax withholdings, and benefit withholdings.

The rules regarding pay stubs vary from state to state. Some states require employers to provide pay information to the workers, while other states do not require it. Businesses should confirm these requirements in every state where they employ workers.

Employees should keep their most current pay stubs as proof of income. If an individual applies for a loan, the pay stub confirms that it is the borrower’s gross income. Employers should keep pay stubs on file if they are already generated.

The pay stub information should match the data on every employee’s W2 form, which shall be used to file their tax returns. To create paystub, the first step is to have every employee complete their Form W-4.

Read the Related Article How Long Should I Keep Pay Stubs?

How Does A Paystub Works?

Let us explore sections of a pay stub:

Earnings:

Gross Earnings: This displays an employee’s whole earnings before any deductions. It encompasses regular pay, overtime pay, bonuses, commissions, and other additional income sources.
Hours Worked: This outlines, the times worked the corresponding pay rates, and the earnings for different categories like regular hours and overtime.

Deductions:

Federal Income Tax: This showcases the amount withheld for federal income tax.
State Income Tax: If applicable, state income tax is enumerated separately.
Other Deductions: Health Insurance Premiums, Retirement Plan Contributions, and other benefits.

Net Pay:

Net pay is commonly known as Take-Home Pay. This is the section of the paystub that represents the ultimate amount that the employee will receive after all the deductions have been deducted from their gross earnings.

Read Article: What is the Difference Between W9 and W4?

Form W-4 it’s Working Process

The Employee’s Withholding Allowance Certificate (Form W-4) is a form that the federal government requires employers to fill out when they are new at the job. Information submitted on the form lets the employer know how much salary to withhold from a paycheck for tax purposes.

Remember the following:

  • As an employer, you should keep an employee’s most recent W-4 form in his or her payroll file.
  • You also need to ensure that you add the correct number of allowances into your payroll processing system.

The W-4 collects the worker’s general information like name, address, and filing status and guides employees who have multiple jobs. There are extra resources provided to calculate the withholdings for these situations.

Information Needed To Create Paystub

Resolve the following for each employee:

  • Payroll Cycle: The number of pay periods determines how much salary is paid on each payroll date. It determines the starting and ending days for computing an hourly payroll.
  • Wages: Net pay and Gross pay. Wages might be based on a salary or calculated using an hourly rate.
  • Tax Withholding: State, Federal, and Local amounts withheld for taxes.
  • Benefit Withholding: Amounts withheld for the employee’s share of insurance premiums.

Calculating Net Pay:

For example, John’s annual income is $60,000, and your firm processes payroll 26 times a year. Sally’s gross pay each pay period total ($60,000 / 26) per pay period.

Based upon the allowances on his W-4, the firm should withhold 20% of her gross pay for federal taxes and 5% for state taxes. John also pays $50 each pay period for her share of the company health insurance plan.

John’s net pay is $2,038 less a total of $577 for taxes and $50 for his health insurance premiums. His net pay is $1,681.

A Pay Stub must include all of this information for the current payroll period and year-to-date. The pay stub you generate might also include unemployment tax payments. Hourly workers need details on their total hours worked, and any hours that are paid as overtime wages.

Read Full article: Creating pay stubs If You’re Self-Employed

Why are Pay Stubs Crucial?

Creating pay stubs is a vital part of processing payroll because that serves as a receipt of payment for employers. They verify that the taxes are withheld as and when required for a given pay period, as were employee deductions for health benefits and retirement plan contributions.

Conclusion

Now you know how to create paystub and in case you want to know more about it and want to get a real hands-on experience with paycheck stub generator free then you should checkout eFormscreator.

How Long Should I Keep Pay Stubs?

Nov 28th, 2023

If you’re an employee, employer or independent contractor, there are various reasons as to how long to keep pay stubs.

Not only does a pay stub help you streamline the tax filing procedure, but it also helps avoid legal trouble in the event of an audit.

Individuals can use pay stubs to get a loan, open bank accounts, and ensure that their deductibles are appropriate.

This blog will outline everything you need to know about how long you should keep a pay stub and why you should do so.

What is a Pay Stub?

A Pay Stub is a document that shows an employee’s earnings and total deductions during a particular pay period. These documents indicate how much income tax, social security contributions and other benefits are deducted from an employee’s salary.

A Pay Stub contains the following information:

  • Personal Details including postal address, full name and Social Security Number.
  • Employer’s Address.
  • Number of hours worked.
  • Gross pay before deductions.
  • Any taxable deduction and benefit.
  • Net income after deductions.

Free Paystub Generators: Everything You Need to Know

How Long To Keep Pay Stubs and Do Employers Have To Provide Pay Stubs?

The Fair Labor Standards Act (FLSA) states that employers should keep a record of the following:

  • Each employee’s personal information, including their full name and address.
  • Any information relating to an employee’s compensation. This includes worked hours, hourly rates, overtime and deductions.

Although employers are required to record employees’ compensation, they aren’t necessarily required to provide them with digital or paper pay stubs.

States where employers are required to issue pay stubs are:

  • Alaska
  • Arizona
  • Idaho
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Maryland
  • Michigan
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New York
  • New Jersey
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Utah
  • Virginia
  • West Virginia
  • Wisconsin
  • Wyoming

States Where Employers Are Required To Issue Pay Stubs:

  • Alabama
  • Arkansas
  • Floria
  • Georgia
  • Louisiana
  • Mississippi
  • Ohio
  • South Dakota
  • Tennessee

While some states do not require pay stubs to be issued to employees, formal institutions like banks need them as proof of income.

This means that the employees need to create their pay stubs. In this case, employees can use their contracts to know how much they earn.

Paystub Deduction Codes

How Do You Get Pay Stubs as an Independent Contractor?

Independent Contractors are self-employed individuals who provide services to different clients and firms.

Examples of Independent Contractors are writers, painters and graphic designers.

Why Should I Keep Old Pay Stubs?

Employees, employers and independent contractors must keep their old pay stubs for various reasons. Let’s see what those reasons are:

Employers: Business owners must accurately record their employee’s information, including compensation-related details. If a business has financial statements like pay stubs in hand, they might find themselves on the right side of the law, leading to an investigation.

For example, an employee has filed a complaint against their employer about their salary. An employer can use pay stub records while filing an employee’s income tax returns.

Employees and Independent Contractors:

No law requires employees or independent contractors to monitor their earnings and deductions.

It helps to ensure you are paid adequately: When you receive your pay stubs, you can check and monitor your earnings and deductions.

This ensures that the right taxable deductions are subtracted from your wages and that you are being paid in an orderly fashion as per your employment agreement.

You can use Pay Stubs as Proof of Income: Many formal institutions need proof that you have a stable income before you can use their financial services. For example, banks will only allow you to take out a loan with proof of income. You can use pay stubs as proof of income, though you will be able to repay debts.

Paystubs make Tax Filing Easier: You need to use your pay stubs to calculate wages and deductions on your W-2 when you file your taxes. Your annual income will dictate how much tax you must pay, your health and other insurance premiums, and the Social Security benefits you are eligible for.

How Long Should I Keep Pay Stubs?

Employers:

Record-keeping requirements differ from state-to-state. Generally, employers are encouraged to keep their financial records for at least three years.

Employees and Independent Contractors:

It is recommended that you should keep your pay stubs for at least 12 months. You shall need your pay stubs to accurately file your W-2 forms and Social Security contributors to ensure you are paying the correct amount of tax on time.

Self-Employed? Here’s How To Show Proof Of Employment

What are Some of the Best Ways To Store A Pay Stub?

Trying to store and organize the physical copies of your pay stubs for several years can be hectic. Not only does this take up a lot of space, but it will be frustrating to search for the documents if everything needs to be properly organized.

Using the cloud-based digital solutions where you can easily store your documents online makes this manageable. You can scan and upload the physical pay stub copies to your computer to keep digital records.

Conclusion

The basic deadline for the question How Long Should I Keep Pay Stubs is 12 months. In case you are looking for an easy and affordable tool to create paystub online free, eFormscreator is your one-stop shop. The user-friendly tool is fully automated, allowing you to create pay stubs quickly.

Paystub Deduction Codes

Nov 10th, 2023

To correct payroll, you need the right information, including the data required to create paystub. A pay stub lists all the valuable information about an employee’s pay.

A Deduction Code identifies types of deduction codes, like significant medical, health benefits, credit union payments, charitable contributions, etc.

Employers and workers must understand the information on a pay stub. Employers must generate authentic pay stubs that match the gross pay, tax withholdings, and other payroll amounts.

This blog explains the information required to create a paystub and view the most common paystub deduction codes.

What is a Pay Stub?

In most cases, a pay stub is being provided to the employees. It includes essential information about an employee’s payment, such as wages earned for a pay period, essential deductions, and the amount of money an employee takes home.

This information can fluctuate depending on your state, though many states require you to give pay stubs to your employees. You should keep a copy of each pay stub for your payroll record.

Why are Pay Stubs Crucial?

The employees and employer can use pay stubs to record previous wages, but they can also make sure that the payments are accurate.

By viewing how their payment is broken down, employees can understand their tax deductions and know how much of their tax is going where.

If there is no equality between you and your employer, you can use the pay stubs to prove they were paid equally. Employees can use the pay stub to help them complete their W-2 forms when completing taxes.

create-paystub

Information Needed To Create Paystub:

Regulate the information for each employee:

Payroll Cycle: The payroll Cycle is defined as the number of pay periods that determine how much salary is paid on each payroll date. It also determines the start and end days for computing hourly payroll.
Wages: Gross pay and Net pay. Wages might be based on salary using an hourly rate of pay.
Tax Withholdings: State, Federal and Local amounts withheld for taxes.
Benefit Withholdings: Amounts withheld for the employee’s share of insurance premiums to be invested in a retirement plan.

The rules regarding the pay stub vary state by state. Some states require employers to provide workers pay stubs, while others do not.

Employees should keep their most recent pay stubs as evidence of income. If an individual applies for a loan, the paystub confirms the borrower’s gross income.

The pay stub information should match the data on each employee’s year-end W-2 form, which the individuals use to file their personal tax returns.

Understanding FICA, FUTA and SUTA Taxes

A pay stub shall report FICA, FUTA and SUTA Tax information.

FICA tax is collected to fund Social Security and Medicare. FICA is a compulsory payroll tax for the Federal Insurance Contributions Act.

The FICA Tax comprises two separate taxes which fund two large programs managed by the Federal Government: Social Security and Medicare.

The Medicare rate is 1.45% on all wages, and high-income taxpayers will pay an additional 0.9% tax for Medicare.

Employers also pay 7.65%, deducting the cost as a business expense. The employer’s payment is generally included in the pay stub.

The FUTA funds unemployment programs, taxes and the SUTA tax. The employer pays these amounts, but is also reported on the pay stub.

Pay Stub Deduction Codes

The most common pay stub deduction codes include:

FED, FIT, FWT: Federal Income Tax Withholding.
SIT, State, SWT: State Income Tax Withholding.
FICA: FICA taxes paid for Medicare and Social Security.
YTD: Year-To-Date.
MED: Insurance deductions for health, vision and dental insurance.
INS: Insurance deductions for other coverage like life insurance.
401(k): 401(k) contributions into a retirement plan.
FSA or HSA: Contributions into a flexible spending account (FSA) or health savings account (HSA).

What is a Stub Deduction?

Standard pay stub deductions include state and federal income tax and Social Security Tax. State and federal withholdings account for much of the gross and net income gap.

Conclusion

Deduction Code identifies deduction codes, like significant medical health benefits, credit union payments, charitable contributions, etc. Create Free Paystub easily with eFormscreator for free!

Self-Employed? Here’s How To Show Proof Of Employment

Oct 12th, 2023

It is an easy task for full-time, contracted employees to deliver a proof of employment. All they need to do is ask the HR department at their firm for a copy.

Self-employed might not be able to show a proof without any help. Verifying employment is crucial when applying for a personal loan. In this blog, we will be covering how to show proof of employment if you’re self-employed individual.

Who is eligible to be a Self-Employed Individual?

Self-employed, commonly known as Independent Contractor report self-employment income. If you’re self-employed, you will work for yourself rather than for an employee.

As stated by the IRS, a self-employed individual is someone who:

  • Partakers in trade
  • Is part of a partnership in a trade
  • Is in business for themselves

Self-employed individuals may work for:

  • Writer
  • Editor
  • Designer
  • Salespeople
  • Construction Workers

What is a Proof of Employment?

Proof of employment is a form of document that hires companies to request to confirm an individual’s work history.

Below mentioned are the common reasons why a third party might want to verify your employment which include:

Loan Applications: If you are trying to apply for a loan, the lender will want to see whether or not you will be able to pay back their money which is based on your monthly income.

They might also want you to provide a proof of your employment. Once this is understood, the lenders shall establish how the repayment can be scheduled in terms of loans.

Applying to Rent: Many property owners rent out their houses and want to make sure that the new tenants will be able to afford the rent or not.

For example, are you going to work somewhere else or on the property itself? The proof of employment helps the landlord get a better understanding of your employment and if you have a stable income in order to cover the rent.

Searching for Another Job: If you’re looking for another job, salary negotiations will inevitably happen, and the interviewer will ask about your current salary, which they shall take into consideration. This will give the employer a brief overview of your past employment status.

Credit Card Applications: Finacial Institutions depend upon various factors when they consider requests for credit cards, which include the applicant’s current employment and salary. Proof of your employment shows credit companies that you will be able to meet your debt goals and their payments in a timely order.

How to Show Proof of Self-Employment?

HR departments at large companies have to deal with proof of employment and also have a system in place to issue these documents. However, if you’re a self-employed individual, you might need to generate these documents yourself in order to show a proof of your employment.

Annual Tax Returns: Form 1099-NEC is a tax document which is used to report the income earned by independent contractors. Firms are required to file a copy of Form 1099-NEC with the IRS and to send a copy to the independent contractor. This is because the IRS must know that how much tax revenue they can expect from a self-employed individuals. It is important to note that the independent contractor who has earned more than $600 from a business shall receive a Form 1099-NEC.

Form 1099-NEC is used for showing verification of your income. It provides physical proof of self-employed earnings, the amount earned, and where it came from. 31st January is the deadline to submit independent contractors with a copy of their Form 1099-NEC. It is also the deadline for providing the employees with a W-2 form.

Pay Stubs: A pay stub is a written document that showcases how much a person is earning during a specific pay period. There are different ways via which a self-employed worker can receive and create pay stub. One choice is to contact the HR department at the firm where you have provided services.

For a self-employed individual, this is the basic information listed on a pay stub:

  1. The name of the firm that provides the service for
  2. Independent Contractor’s Job Title
  3. Number of hours worked during a pay period
  4. The total wages paid before the self-employed worker’s deductions made
  5. State, Federal, and Local taxes withheld from an individual contractor’s gross earnings

Pay stubs are important because they can provide proof of income and employment for self-employed individuals.

Bank Statements: Bank Statements, commonly known as account statements- are documents that are typically sent by a financial institution to their account holder each month.

This account statement is a history of all the transactions that the account holder makes during a particular period of time. The statement contains bank account information like account numbers detailed list of the holder’s total income and expenses.

For lender and financial institutions, a bank statement can be the proof of the employment and can afford to meet their repayment dues on time.

Employment Verification Letter: An employment verification letter is the kind of document which is written by a current employer who confirms the employment status of the current employee. Potential employers and other various government agencies can request an employment verification letter.

Conclusion

So, now you know that if you’re a self-employed individual and need a loan for a car, showing a letter of self-employment as proof of income this should not be a problem for you and in case you need to create paystub, we have our very own free paystub generator for you to generate a pay stub easily.

Creating pay stubs If You’re Self-Employed

Sep 27th, 2023

If you’re self-employed, your main focus will be securing new consumers and delivering a quality product. However, there is more to growing your business, including payroll-related issues. Use our free paystub generator to generate professional-looking pay stubs to maintain productivity.

Understanding Pay Stubs

Pay stubs are the key to all the crucial employee pay information. While reviewing a pay stub, it is important to note the difference between the current pay period and the year-to-date amount. Both are important as the employer and the employee understand if the amount is correct.

The pay stub provides wages, tax withholdings, and benefit withholding information.

Self-employment pay stubs do not have any withholdings from their pay.

You can issue a pay stub to a contractor who lists out the gross amount paid, and the contractor can use the pay stubs for contractors to prove his earnings to the lender.

The rules and regulations regarding pay stubs vary from state to state. Most states must provide pay information to workers, while others do not. Businesses should make a confirmation statement of the requirements in each state where they employ workers.

Employees should keep their most recent pay stubs as a proof of income. If an individual employee applies for a loan, the pay stub confirms the borrower’s gross income. Employers should keep pay stubs on their file if it’s generated.

Information Required to Create a Pay Stub

Keep in mind to check the following things:

  • Payroll Cycle: The number of pay periods decides how much salary is paid on each payroll date.
  • Wages: Gross and net pay. Wages may be based on the employee’s compensation or calculated upon the hourly pay rate.
  • Tax Withholding: Federal, State, and local amounts withheld for taxes.
  • Benefit Withholding: Amount withheld for employee’s share of insurance premium.

How to Calculate Net Pay?

For example, Janet’s annual income is $5,000, and your company processes payroll 26 times yearly. Julie’s gross wages each pay period total $5,000/26 or $1,923 pay per period.

Based on her allowances on the W4 forms, the company should withhold 20% of her gross pay for federal taxes and 5% for state taxes. Janet also pays $50 each pay period for her shares of the company’s health insurance plans.

Janet’s net pay is $1,923, less than $480 for taxes and $50 for her health insurance premiums. Her net pay is $1,393.

The pay stub will include all of the information as mentioned above for the current payroll period and year-to-date. The pay stub that you generate also includes unemployment tax payments. Hourly workers need details on their total hours worked and any hours paid as overtime wages.

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Should you be Paying Yourself Like an Employee?

A Pay stub demonstrates that your company pays you regularly just like any other employee, meaning that the Federal, State, Social Security, and Medicare taxes are withheld from your paychecks.

The withholding amount keeps you in check with the taxes owed at the year’s end; it is easier to withhold from each paycheck. The pay stubs showcase regular income.

This is important if you’re applying for a loan. Self-employment pay stubs generally have a shift via extra hoops to prove stable earnings. If you have a pay stub and a W-2 form, which your company generates at the end of the year, you can show consistency of income.

Conclusion:

eFormscreator provides you with a free pay stubs generator, which is user-friendly, and takes less time in generating pay stubs. Use eFormscreator to create pay stubs and streamline your process.