Effective Ways to Make Pay Stubs for Your Employees
Pay stubs are very important for quite a number of employees especially in cases whereby employees would want to file their tax or even they have plans of applying for mortgage. As an employer, it is important for you to understand that you are supposed to be making pay stubs for your employees. There are quite a number of employers that are always adamant due to the fact that the federal law does not require that pay stubs be made. 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. Outlined below are some of the tips you can use to ensure that you make pay stubs for your employees in time without committing any error in the process of making them.
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. Determining the multiply for overtime work is quite easy in the process involves taking the number of overtime hours multiplied by 1.5. The gross income of your employee will be the sum of two multiplications you’ve done.
The next thing should be finding out amount to be deducted from the employee’s gross income. 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 that you see to it that Social Security and Medicare are deducted. 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