Essential Steps to Follow When Making 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. You cannot shy away from the fact that the quite a number of employers who do not have a clue on how to make pay stubs for their employees. Making pay stubs for your employees can be quite easy and following the guidelines that have been highlighted underneath you will be able to make good ones.
The first thing you need to do as an employer is try and calculate the gross income of each of your employees. The best way to achieve this is by finding out the number of hours an employee has worked and then you multiply it by your rate of pay in which in your case is the standard rate of pay. Overtime hours is another important thing you need to consider. The next is to take the number of overtime hours and then you multiply it by 1.5. When you are the two amounts that you have obtained, you will come up with the gross income of your employee.
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. Another thing you should deduct is Social Security and Medicare. Obtaining the employee’s deductible amount for Social Security is very easy because all you need to do is take 0.062 and multiply it by the employee’s gross income and then take 0.0145 and multiply it by employee’s gross income to obtain the deductible amount for Medicare. The amount that remains after the deductions is what is known as the net income of employees. Click here for more It is essential for you to ensure that you include the name of company, employees name and your Social Security number. Click here