It’s official, self-employed people are happier than everyone else. It’s the new American dream to work for yourself, follow your passion and answer to no-one.
That’s not to say it’s all smooth sailing as a self-employed individual. You need to wear many hats to be the accountant, marketer, sales person, and employee. Certain tasks can leave you feeling confused about where to start, such as proving your earnings.
That’s why we’re going to talk about what should be included on a pay stub so that you can prove your income whenever needed.
What Should Be Included on a Pay Stub
Okay, so you need to show proof of earnings, but what exactly does that look like? Let’s take a look at everything you need to include on a pay stub.
Basic Details
Employee Name: Full Legal Name
Pay Date and Range: The pay date is the actual day that the employee receives that payment, and the pay period is the full length of time that the pay date covers.
Gross Pay
The gross pay includes all payments made to the employee for the stated pay period before any deductions are made. Gross Pay might include salary, regular hourly wages, double-time or overpay wages, holiday pay, vacation pay, tips, bonuses, commissions and expenses reimbursements.
Deductions
Federal Taxes Withheld: Your Federal Tax withholding depends on your tax bracket. This works on a graduated scale based on how much you earn, in the US it is between 10-37%.
State Taxes Withheld: Each state is responsible for setting their own personal income tax rates. Some have bracketed rates that are similar to the IRS, some have flat rates for all and come have no income tax at all. State taxes can be somewhat complex if you live and work in different states as both states cannot tax the same income.
Local Taxes Withheld: Some metropolitan areas such as New York City, set their own local taxes to help pay for local government services.
Contributions
Insurance: Your pay stub should indicate whether you contribute to any health, life or disability insurance plans.
FICA: This is a confusing contribution for many who are unsure of what FICA means. FICA stands for Federal Insurance Contributions Act. Basically, this is your contribution to Medicare and Social Security. For more information about Medicare, you can check this Accendo Medicare supplement website.
Pension Plan Contribution: If your employer offers a retirement plan such as a 401k then your contributions will need to be detailed on your pay stub.
Net Pay
You need to outline your Net Pay or the amount you receive after all deductions. This is essentially your real paycheck amount.
You can easily create a pay stub with https://www.thepaystubs.com/.
Ready to Create a Pay Stub?
Recent statistics show that 33% of us are self-employed. With increasing numbers of people working independently, it is important that they know how to show proof of income wherever needed.
Now that you know what should be included on a pay stub, you can create your own.
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