If you want to know how to make a contractor pay stub, look no further.
In recent years, there’s been an increase in independent contractors because many people want to work for themselves. While this prevents people from having to work a 9-to-5, many find it difficult to make official, legal documents as a contractor.
Pay stubs are some of the most common documents that people use when they’re working independently. They provide all of the information they need for taxes and they can use the stubs to apply for loans.
Creating a contractor pay stub doesn’t take long, so read on to learn how!
What Pay Stubs Are Used For
When it comes to proof of income, a pay stub is one of the best documents you can use. When you know what pay stubs are used for, creating a contractor pay stub will be easier because you’ll know what to put on them.
Most people get their pay stubs from employers whenever they get a check. However, those that are contractors, such as gamers, generally have to make the pay stubs themselves. If you’re working with contractors, you can make them and provide it to them when they’re paid.
Unfortunately, many contractors have a hard time proving their income because there aren’t many legal documents they can make. Pay stubs are legal proof of income, but you must ensure that all of the information on them is correct.
Proof of income is often used when you need to take out a loan for something. Lenders will want to see your financial history, so pay stubs will show them exactly how much you make.
Here are the most common loans people use pay stubs to get:
- Auto finance
Aside from getting a loan, a pay stub will help you when you need to file taxes. You can review the information on your stubs and make calculations without having to search through a ton of files.
Whether you’re making a pay stub for yourself or would like to make them for the contractors you’re working with, you can get started by choosing a program.
Use a Program for the Contractor Pay Stub
Various programs exist that let you make pay stubs without putting in too much work. For example, you can go onto something like Excel and start making pay stubs for contractors from scratch. It doesn’t matter what program you use, you’ll just need something that gives you the tools to make a pay stub template.
Although Microsoft Excel is used by many people, most prefer to use Google Spreadsheets because it’s free and provides just as many features. The key difference between Excel and Spreadsheets is that everything you do on Spreadsheets will be saved to the cloud.
Having your pay stubs saved to the cloud makes documenting payments easier because you can access them from everywhere. You can also share the pay stubs with contractors via email or have them access the file from Google Drive.
When it comes to paying contractors and giving them pay stubs as quickly as possible, it’s best to use a paycheck stub template from a generator. Pay stub generators prevent you from having to format the pay stub, you just need to enter the information. You can then print and save the pay stub for later use.
Pay Stub Information
When you’ve decided on the program you’d like to use, the next step is to start filling out the pay stub. Pay stubs don’t contain a lot of info, but they have the main things that you’ll need to use when proving income or filing taxes.
You’ll need to insert the name and address of the person that’s receiving the money. You must also insert employer information, including the name of the business and its address. If you’re an independent contractor, you don’t need employer info.
Most people are familiar with gross pay because it’s what they think of when they think of their hourly rate or salary. Your gross pay is the total amount you’ve earned over a period before any deductions are made.
For example, if you make $10 an hour while working 40 hours a week, your weekly gross pay would be $400. Contractors usually don’t get paid consistently, so their gross pay will change.
After calculating your gross pay, you’ll need to make deductions to it so you can eventually come up with your net pay. Most people will need to deduct money for Social Security, state, and local taxes. If the contractor has a retirement plan, they’ll deduct that money, too.
You should check out the IRS Employer’s Tax Guide to get an idea of how much you should be deducting. Depending on where you live, your city might not require local tax deductions.
Net pay is the final amount you get after deductions are made. If you’ve ever worked for an employer, this is the amount that you’ve seen on your checks. To come up with net pay, just apply the deductions to your gross pay and enter that number.
Start Making Pay Stubs Today
Now that you’ve read this article, you know how to pay contractors and provide them with pay stubs! Anyone that’s looking to make a pay stub for themselves can follow the same steps.
It’s best to make a contractor pay stub any time you’re paying someone or getting paid. This will make keep tracking of everything easier, and you’ll look more consistent when you want to prove your income.
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