When you're self-employed, it's a challenge to juggle your own paperwork. Unlike traditional employees, you don't usually receive a pay stub listing your earnings and tax deductions.
Does that mean there's no such thing as an independent contractor pay stub? What if you need to show proof of wages for a new car, home, or credit card? Read on to learn more about your options for obtaining an independent contractor pay stub.
Employee or Independent Contractor Pay Stub?
Before we talk about pay stubs, let's first define the difference between an employee and an independent contractor.
If you're an employee, you most likely:
- Work a set schedule of assigned hours
- Have taxes deducted from your paycheck
- Receive training from the company
- Have work assigned to you by a manager
- Are given the tools and equipment you need for your job
- Work for only one employer
- Receive benefits such as holiday pay, sick leave, and health insurance
On the other hand, independent contractors typically:
- Make their own schedules
- Are responsible for their own taxes
- Supply their own tools and equipment
- Can accept or refuse offers of work
- Use their own knowledge/previous training to do the job
- Work for more than one client or company
- Do not receive any benefits beyond their paychecks
If it seems like your job falls somewhere between these descriptions, you're not alone. It's estimated that US employers wrongly classify millions of workers as independent contractors.
W-2 or 1099?
If you're still uncertain, take a closer look at your paperwork. At the end of the year, which tax form do you receive for your work?
A W-2 is the form given to employees by the company they work for. It lists annual pay and includes details about tax withholding, holiday pay, and health insurance.
A 1099-MISC is the correct form for independent contractors. It lists only the total amount of income you received during the year, without anything withheld.
Does a 1099 count as an independent contractor pay stub? No. However, you can use the information from your 1099 to create your own pay stub.
Generating an Independent Contractor Pay Stub
Because you're self-employed, you don't receive a standard paycheck or pay stub. That's okay. You can use a free online tool to create your own pay stubs.
Just follow these simple steps:
- Choose your state of residence.
- Select whether the pay stub is for yourself or an employee.
- Fill in your personal information.
- Fill in your company details.
- Fill in additional fields (salary, hours worked, hourly pay, etc).
- Add any deductions or withholdings.
Once you submit the information and choose your template, you're done! An easy online payment allows you to download and print out your independent contractor pay stub. Now you have the proof of income you need to apply for that loan or qualify for tenancy.
Navigating the world of income, taxes, and pay stubs is no easy tasks. Now that you understand the difference between contractors and employees, you'll be better prepared for next tax season.
Are you an independent contractor in need of pay stubs? Click here to quickly and easily create your own stubs.