Main Advantages of Using a Paystub Generator |  Guide
May 02, 2023
If you’re in the process of evaluating and upgrading your current payroll process, you should consider checking out the advantages of using a paystub generator.
A paystub generator is an online tool that lets you customize and create as many pay stubs as you need, error- and hassle-free. Pay stub generators highlight convenience and practicality, making them the perfect companion for startups and enterprises alike.
If you’re keen to know more about how using a pay stub generator can benefit your business and your employees, then you’ve reached the right article!
Keep reading to find out why a pay stub generator is an absolute must-have to enhance your payroll management and business!
- A pay stub is a document that contains an employee’s gross earnings, benefits, deductions, overtime pay, total hours worked, and net earnings.
- You can create pay stubs manually in programs like Word or Excel or use an online pay stub generator.
- Using a pay stub generator is time and cost-efficient, hassle-free, and makes paperwork a breeze.
- Pay stubs also come in handy when filing taxes, applying for loans, renting an apartment, and in many other situations.
What is a Pay Stub?
A pay stub contains the gross earnings, benefits, tax withholdings, overtime pay, total hours worked, and net pay of an employee. Also called a paycheck stub or wage statement, pay stubs are similar to a receipt or proof of payment because employers issue them when paying their employees.
Employers prepare and issue pay stubs every pay period. Depending on the payroll cycle followed by a business, paystubs may be released to employees either bi-weekly, semi-monthly, or monthly.
There are no federal regulations or laws that require employers to issue pay stubs. However, state laws have different provisions when it comes to creating and issuing employees’ wage statements.
In New York and Illinois, for example, employers are required to issue pay stubs either in paper or electronic form. Meanwhile, Texas and California also allow both electronic and paper pay stubs. The only difference is that employees receiving electronic paycheck stubs must have easy access to tools that let them print their wage statements.
A typical pay stub is enclosed in an envelope and includes the employee’s salary for the pay period. These days, a digital counterpart to these paper-based paycheck stubs is becoming more popular because they are convenient and less prone to getting misplaced or physically damaged.
Another notable reason behind the increase in the use of electronic wage statements is the availability of online pay stub generators.
The Main Advantages of Using a Paystub Generator
Now that you’re familiar with pay stubs, let’s go over some of the advantages of using a paystub generator:
#1. Saves Time
Even with a team of accounting personnel working on your payroll, it can be tedious to create pay stubs for every pay period. To generate the pay records of each employee, you must factor in their specific tax situation, work hours rendered, and wage rates.
With a pay stub generator, you can get the job done in no time. All you have to do is choose a template, provide all the key information for each employee, and generate multiple pay stub statements in minutes.
#2. Easy to Use
If you are self-employed or an independent contractor, you will be impressed by how easy it is to use a free online generator. You don’t need to have an extensive background in accounting, know payroll management by heart, or download other software and plug-ins to use a pay stub generator.
Pay stub generators are pretty straightforward and convenient to use. All you have to do is fill in the blank fields, and you’ll be good to go.
#3. Eliminates Errors
As they say, making mistakes is human. Luckily, pay stub generators significantly eliminate human error in creating pay stubs. Some generators come with a built-in calculator that does all the math for you, calculating wages earned, taxes, and other salary deductions.
It is crucial for businesses to produce pay stubs with accurate and correct information. Otherwise, they may face disputes with employees, especially if the latter discovers miscalculations in their gross and net wages.
Also, mistakes in tax and benefit deductions could potentially lead to an IRS audit.
Forget about wasting ink and paper by printing paper pay stubs bi-weekly or monthly. Online generators effectively reduce your company’s paper waste.
Eco-friendly practices should be a priority among businesses today, considering the drastic climate conditions currently affecting the global population. When you produce several paper pay stubs, you also release heaps upon heaps of CO2, which is detrimental to the atmosphere.
In contrast, electronically generated documentsminimize your company’s carbon impact on the environment.
Whether you own a considerably large company or a small business, pay stub generators let you maximize your existing budget and resources.
Operating and sustaining a business does come with its fair share of expenditures. To balance your expenses, you need to find solutions and alternatives that help regulate the money that goes out of your pocket.
It is more costly to hire additional payroll personnel than it is to use an online paystub generator.
#6. Creates Easily Accessible Records
A major disadvantage of paper pay stubs is that they can get misplaced, worn out, or even lost in disasters. By creating digital copies, you can foolproof your pay stubs for all of these scenarios.
Using an online generator lets youmake electronic pay stubs that you can either email directly to your staff or store on your hard drive or cloud storage for future use.
It is also easier to retrieve electronic pay stubs from previous pay periods since you don’t have to sift through folders and piles of documents to find the financial records you need.
#7. Professional Looking and Customizable
It is not enough to print an employee’s wages earned, deductions, and tax withholdings on a simple piece of paper and call it a day. Preparing professional-looking pay stubs shows that the employer respects and acknowledges their staff as an integral part of their business.
With a pay stub generator, business owners can customize the appearance of their wage statements and align them with their company’s branding. More importantly, pay stub generators help create consistently neat and decent-looking paycheck stubs.
Why are Pay Stubs Important?
Here are some situations in which pay stubs are super useful:
Pay stubs enumerate all tax withholdings from employee salaries for each pay period. Keeping a complete record of all pay stubs received in a given tax year makes it easier to file taxes and check how much you’re due for taxes.
Applying for Loans
Pay stubs serve as proof of income for employees, freelancers, and self-employed individuals. Loan application officers are well-versed in comparing real and fabricated pay stubs.
As such, inspecting the authenticity of the paycheck stubs submitted to them lets them segregate potential scammers from loan applicants with a stable and trustworthy financial background.
Landlords need to ensure that applicants who are interested in renting their apartment have a stable income source to afford the rental rates and fulfill their payment obligationscontinuously. And that’s where paystubs come in!
If you provide pay stubs to your landlord, they can check whether you have a stable income source to afford the rental rates and fulfill their payment obligationscontinuously.
What Goes on a Pay Stub?
A pay stub should contain the following information for it to be a valid document that employers, freelancers, independent contractors, and employees can use:
- Employer information. Employer’s name, address, contact information, bank details, and Employee Identification Number (EIN).
- Employee information. Employee’s name, address, contact and bank information, and Social Security Number (SSN).
- Gross earnings. The wages earned by an employee before taxes and benefits are subtracted.
- Net earnings. The total wages earned by an employee after taxes and benefits are deducted. Net earnings show the amount deposited by employers to their employees every pay period.
- Pay rate. Pay rate refers to the amount paid to the employee per hour worked.
- Federal, state, and local taxes withheld. These are the amounts withheld by employers from employee salaries to fulfill their federal, state, and local tax obligations.
- FICA (Federal Insurance Contributions Act). FICA taxes are deducted from employee wages to fund the federal government’s Social Security and Medicare programs.
- Wage garnishment. Wage garnishments are court or IRS-mandated deductions meant to pay for child support, alimony, or outstanding loans.
- Voluntary deductions. Voluntary deductions may be in the form of retirement benefits, group term life insurance, health and life insurance premiums, or union dues.
How to Use a Paystub Generator in a Few Simple Steps
Our free online generator is a convenient and highly practical tool to use for small businesses, mid-size enterprises, independent freelancers, and self-employed individuals.
The best part about our online generator is that it comes with a built-in calculator, so you can calculate taxes and other wage deductions with precision.
All you have to do is:
#1. Open the Generator and Choose a Template
Paystub offers six different templates, each designed for a specific business preference. You can choose from various colored templates or our more detailed layout.
#2. Fill in the blank boxes with the necessary basic details.
When filling out the blank boxes in the generator, consider the following key tips to ensure you don’t miss out on any important details:
- Pay period. How frequently will you disburse employee salaries? The number of pay stubs you generate in a month and a year depends on whether you pay employees bi-weekly, monthly, or semi-monthly. If you pay your staff bi-weekly, then that means you create pay stubs twice a month, 26 times a year. A semi-monthly pay period yields two paycheck stubs a month and 24 pay stubs annually.
- Payment type. Here, you have two options: hourly or salary. Choose ‘hourly’ if you pay employees per the number of hours worked and ‘salary’ if you pay your staff a fixed amount every pay period.
- Manual or automatic calculation. Turn on our auto calculator if you don’t want to spend too much time doing the math for each paycheck stub.
- Employment Type. Choose the ‘Employee’ option if you’re making a pay stub for a salaried employee. The ‘Contractor’ option is for freelancers and independent contractors.
#2. Enter Your Company Information
Enter the following details about your company or business:
- Company Name
- Telephone Number
- Street Address 1
- Street Address 2
- Zip Code
Adding a logo to your pay stub is highly recommended, as it adds a formal and legitimate touch to your employee’s wage statement.
#3. Enter Your Employees’ Information
The following information about your employees is a must when making pay stubs:
- Employee Name
- Employee Contact or Telephone Number
- Employee Social Security Number
- Employee ID
- Employee Address 1
- Employee Address 2
- Zip Code
- Marital Status
- Dependents Amount
- Direct Deposit (Yes/No)
#4. Fill in the Earnings Statement Section
In this section, you need to provide the implemented pay period in your company. You also need to specify the pay date to inform your employees of the specific weeks or time periods covered by the paycheck stub.
Input your employee’s gross earnings, tax withholdings, deductions, and net pay. If they took some time off from work, you need to indicate how many days or hours. Include bonuses, tips, and overtime pay, if applicable.
#5. Preview and Download the Document
Once you’re done filling out the blank fields with all the necessary information, hit the ‘Preview’ button. Doing so will allow you to review the pay stub while having a good look at how it will look once you generate and download a copy.
If you’re satisfied with the pay stub, simply save or download your newly generated pay stub!
The advantages of using a pay stub generator showcase how there will always be better and more flexible alternatives to laborious work processes such as payroll accounting and management.
At a time when everything is fast-paced and most business undertakings can be carried out digitally, it would be a waste not to maximize online generators to speed up your operations.