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:


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.


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.


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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?


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.


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.