There are many struggles faced by small business owners. A smaller one is how to pay employees or contractors. If you're choosing to pay people through electronic funds transfers (EFT), you may be wondering how to create a pay stub for them. You may also be wondering why you need to create one if your bank tracks the information for you.
Keep reading to learn more about why it's important to generate pay stubs no matter how you pay someone and how to create pay stubs when paying through an EFT transfer.
Why Do You Need Pay Stubs for EFT Transfers
When you pay someone through EFT transfer, the money comes directly out of your bank account. This provides you with a record of the transaction. You can then track that with your accounting software. However, we recommend you take things one step further and generate a pay stub every time you pay someone, whether it's an employee or an independent contractor.
There are several reasons for this, keep reading to find out more.
One of the biggest advantages to your business when creating pay stubs is that it provides you with an extra set of records regarding payroll. That way, if something happens to your accounting software, you at least know how much your employees have been paid.
If an employee or contractor that you're working with needs to provide proof of income, they do so through a pay stub. For this reason, it's important to make sure you're providing them with these on a regular basis.
When discussing salary with an employee, the easiest way to access that information is by pulling out all of their previous pay stubs. Then you can both look at them and see what changes need to be made. It's also easy to make copies for employees if they've misplaced their copy and find themselves needing to provide proof of income. This also shows your employees that you care for their needs.
Ensure Tax Compliance
Having pay stubs is also a great way to show that you're being compliant with state and federal tax laws. When you create your pay stubs through us, we do this automatically which makes it even easier to ensure compliance. It also gives you a simple way to see what taxes to pay. If you're just starting a small business, this can be confusing which is why we work hard to make it one less thing you need to think about.
How To Create A Pay Stub For EFT Payments
Now let's go through the steps you need to create a pay stub for EFT payments through our online software. If you're not using our software, you'll still need to include all of the information mentioned.
1. Fill Out Company Information
The first step is to include information from your company. This includes your company name, address, phone number, and social security number (SSN) or employer identification number (EIN). With our software, you can also include your company logo which helps you create a professional-looking and personalized pay stub for employees.
2. Add Employee Information
Next, you need to add information about your employees. Basic information includes:
You'll also need to include information that's used to determine how much of their paycheck will need to be withheld for tax purposes. For this, you'll need to add:
- Employment status (employee or contractor)
- Marital status
- Number of dependents
- Number of tax exemptions
If you don't know this information or don't need to include it, then you can leave these sections blank and move onto the final section.
3. Create Salary Information
The final area you need to fill out is regarding salary information. Start by choosing whether the person you're paying is an hourly or salary worker. Next, write in their hourly or annual wage and how often they get paid. After that, you can pick the date or dates for which you need to generate a pay stub and then answer a couple of quick questions about when the person was hired and whether or not you want their hourly rate to appear on the stub.
Then you need to add and deduct anything from the payment if necessary. Some things you may add include bonuses and commissions. You may also need to deduct missed days or insurance. Next, you'll need to put in a check number. Since you used a funds transfer, you won't have this information.
If you're working with a contractor that provided you with an invoice, you may want to use the invoice number here. This will create a connection between the invoice and the pay stub to help eliminate confusion. With employees, you may need to generate a unique number that will allow you to quickly identify this information. If you don't want to come up with an additional system to track these, you may want to use the date.
Last but not least, add the email address to which you want the completed pay stub to be sent.
4. Preview Your Stub
After you've completed all of the previous steps, carefully read over your pay stub to make sure all of the information is correct. Taking a few moments here to double-check everything can save you a lot of time and trouble if your employee or contractor finds mistakes when you give it to them.
5. Download Your Stub
Now that everything is done and you've reviewed it, all that's left is to download your completed pay stub. From there, you can send it electronically as needed or print it out.
Ready to Create a Pay Stub?
Now you know how to create a pay stub for EFT transfer payments. As you can see, it's as easy as any other type of pay stub you may need to make. To get started now, give our pay stub creator a try and you won't regret it!