Pay stubs reflect the hours of work dedicated by employees per pay period. It is essential that they have complete and accurate information about employees and freelancers.
But what if the company has a limited workforce or freelancers who cater to multiple clients and projects?
This is where using a pay stub generator proves efficient. The benefits of using a paystub generator are many, namely that it saves you time and money, and most importantly, it provides you with flawless paystubs!
Read on and find out all about them.
What Goes on a Pay Stub?
A pay stub contains all the essential information that leads up to an employee’s net earnings. This includes the number of work hours rendered, the corresponding hourly rates, taxes withheld and other deductions, and the employee’s net earnings.
When it comes to freelancers and independent contractors, their pay stubs showcase the services they have completed for a client or project and the corresponding rates that they need to charge.
What are Pay Stubs Used For?
Since pay stubs go into detail about an employee’s gross and net earnings, they serve as an acknowledgment that the employee has fulfilled the duties expected of them by their employer.
Employees use their pay stubs to verify that they received the proper compensation. In return, employers can showcase that they have completed their end of the bargain, especially in terms of withholding the correct amount for employees’ taxes and benefits.
There are other key uses for pay stubs, namely:
#1. Loan Application
Pay stubs serve as viable proof of income. Banks and lenders need to cross-reference an applicant’s regular salary with the amount they intend to loan.
One of the best ways to affirm that the applicant has the capacity to pay for the desired loan is to review their most recent pay stubs.
#2. Renting an Apartment
Primarily, landlords use pay stubs to verify a tenant’s income. They also use pay stubs as a reliable resource for conducting a background check on their tenants.
#3. Filing Taxes
The IRS does not recommend using pay stubs to file taxes. An exception to the rule is when taxpayers are unable to acquire their Form W-2 in time for the tax filing deadline.
Employees may then attach their last pay stub to Form 4852, including any other essential tax documents, and submit them to the IRS.
What is a Pay Stub Generator?
A pay stub generator is a seamless online tool used to make pay stubs instantly. It has a ready-to-use template containing all the essential fields that users fill out with the appropriate information.
As such, online generators for pay stubs are quite a popular and highly recommended solution among companies and self-employed professionals.
5 Benefits of Using a Pay Stub Generator
The following are the remarkable benefits of using a pay stub generator:
#1. It’s Time Saving
Companies can generate more pay stubs in a shorter time frame. Similarly, startups with a limited workforce can take advantage of the user-friendly design of a pay stub generator.
Even self-employed individuals can create several pay stubs in time to apply for a loan or meet the deadline for filing their taxes.
#2. It Makes Pay Stubs Look Professional
Now that pay stubs are considered valid documents for processing loan and rental applications, it makes sense that pay stub generators come with neat and professional-looking templates.
For instance, freelancers may find it difficult to earn the trust of their clients if they present a sloppy-looking pay stub. Lenders and landlords are also likely to be skeptical about a pay stub that does not look professionally made.
#3. It Eliminates Mistakes
Incomplete employee information and errors in calculating tax withholding amounts spell trouble for both employees and their employer. It could lead to further questioning or auditing from the IRS.
A reliable pay stub generator has all the necessary information prepped for the user to fill out. It can even calculate tax withholdings and other salary deductions in your stead.
#4. It’s Simple to Use
Inputting information into blank, pre-arranged fields and acquiring concrete values using a built-in calculator does not require advanced accounting skills. A few clicks and the correct taxpayer information are all you need to produce a reliable pay stub.
#5. It’s Low-Cost
Using a pay stub generator costs less than hiring additional people in the human resources department or payroll personnel. Some pay stub generators give users the option to pay only for a single completed document. Otherwise, users who want to use the generator continuously are charged an annual rate, thereby helping them cut costs.
Key Takeaways
- A pay stub contains an employee’s gross and net wages, tax withholdings, voluntary contributions, and adjustments to their salary.
- Pay stubs are documents that employees and self-employed professionals can use to apply for loans, rent residential property, or file their taxes.
- A practical alternative to preparing several pay stubs from scratch is using a pay stub generator.
- The simplistic approach of an online generator makes it highly versatile and user-friendly.
- Some of the benefits of using a paystub generator is the time-efficiency, reduced chance of making mistakes, simplicity of use, and low cost.