How to Create a Pay Stub Employees Will Love [Free Pay Stub Template Inside] (2024)

Trust is the cornerstone of the employer-employee relationship. Among many other things tied to day-to-day business, your workforce trusts that you’re paying them fairly and accurately. And with only 21% of US employees reporting that they strongly agree they trust the leadership of their organization, one of the most fundamental things you can do to develop trust is ensure your payroll processes run like clockwork.

Whether it’s miscalculating pay, missing payroll deadlines, or neglecting to keep diligent records, payroll mistakes can impact your credibility as a business owner. The good news, you have a built-in accountability system thanks to the pay stubs your employees get each week.

Pay stubs unpack the take-home pay formula, are highly useful for resolving discrepancies, and are often required for your employees to access some of life’s biggest milestones. Keeping accurate records and encouraging your employees to review their pay stubs regularly can help boost their confidence in leaving their livelihood in your capable hands.

BambooHR fosters fast, easy, accurate paydays with a payroll solution backed by ongoing, expert support. Here, we’ll take a look at what information goes on a pay stub and even get you started with a free pay stub template.

What Is a Pay Stub?

A pay stub, also known as a paycheck stub or earnings statement, is an itemized document that summarizes an employee’s compensation. It’s essentially a snapshot of how much they take home, minus payroll deductions like taxes and retirement contributions.

Pay stubs may be printed and attached to a paycheck, but some companies send electronic pay stubs to their employees.

What Goes on a Pay Stub?

Aside from the amount that goes into the bank, earnings statements display a variety of details. First, it contains key identifying information, such as:

• Company name, address, and phone number
• Employee’s name, address, social security number, and employee ID
• Pay period start/end dates
• Number of regular/overtime hours worked
• Base wage rate
• Check number
• Pay date

Next, a pay stub displays the amount of money the employee earned:

• Gross income
• Net income
• Overtime pay
• Paid time off (PTO)
• Commissions and tips
• Payroll advances
• Bonuses and rewards

It also shows how much money is taken out of an employee’s paycheck for the following:

• Federal and state income taxes
• FICA (Social Security and Medicare taxes)
• FUTA and SUTA taxes
• Wage garnishments
• Voluntary payroll deductions for retirement plans, health insurance, charitable contributions, etc.

Additionally, paycheck stubs typically display year-to-date (YTD) data, which is a summary of the employee’s earnings and deductions from the beginning of the year to the current date.

Do Employers Need to Provide Pay Stubs?

To date, the Fair Labor Standards Act (FLSA) does not mandate employers to provide pay stubs, but many states do—or at least require employers to give employees access to those records. But even if you work in a state with zero pay stub requirements, it’s best practice to distribute them.

Pay stubs serve as a handy reference. Employers use these statements to maintain accurate payroll records, fill out IRS W-2 forms at tax time, and resolve pay discrepancies. Employees use their pay stubs to track their income and verify withholdings during each pay cycle. Plus, many landlords and lenders require pay stubs to prove a person’s income, so they may be necessary to help your employees rent an apartment, get approved for a loan, or refinance their mortgage.

By providing pay stubs that break down payroll line by line, you can reduce the likelihood of potential disputes, make life easier for your employees, and create better transparency across your organization.

How to Create a Pay Stub

Employers can create professional-quality earnings statements in several different ways. If you’re just starting and resources are slim, handling payroll by yourself can be the most cost effective. As your organization grows and this task becomes more time-consuming to handle, enlisting the help of a payroll software is usually the way to go.

Here are some of the most common ways to create pay stubs.

Best Option: Payroll Software

The simplest way to generate pay stubs for your workforce is using payroll software. Most payroll providers generate pay stubs for each employee, automating the process for business owners. Let’s see how this works using BambooHR^® Payroll as an example.

With BambooHR^®, employers manage essential payroll data in a centralized location, inputting key information like:

• Direct deposits
• Hourly, salary, and overtime status
• Pay schedule
• Wage rate
• Withholdings

When you’re ready to run payroll, all the information you’ve entered flows into the system automatically. All you have to do is edit your employees’ hours, make final pay additions, and review deductions. (Yes, it’s that simple!)

On the employee side, BambooHR generates pay stubs under their profiles in an easy-to-understand format. They’ll receive a notification on payday with a link to their pay stub, which they can view, download as a PDF, and save for their records.

Use a Pay Stub Template to Create a Spreadsheet

A free way to create pay stubs is using a spreadsheet in Microsoft Excel or Google Sheets. You can start by creating a pay stub template from scratch, but it’s usually easier to skip this step as many programs have built-in payroll spreadsheet templates.

Here’s how to create a basic pay stub spreadsheet:

• Step 1: Create a table with the information you want to include in your pay stub.
• Step 2: Fill in the table and double-check it for complete accuracy.
• Step 3: Add formulas into the cells to auto-calculate the totals.
• Step 4: Highlight or color-code certain rows for easier viewing.
• Step 5: Print the data for each employee.

Keep in mind, the more employees and benefits your company has, the more complex your table and its calculations become. Aside from using software, a premade pay stub template will make this task quicker and easier each week.

Other Ways to Make Paycheck Stubs

Many of the software programs companies use to conduct everyday business also allow you to create earnings statements, such as:

• Microsoft Word: You can design pay stubs in a Microsoft Word document using a fillable form.
• Google Docs: Just like Microsoft Word, Google Docs allows you to create pay stubs from scratch.

Manually crafting pay stubs in word processing programs may take some time, but templates are available across the internet. The caveat is that you won’t have a support team to back you up if you run into issues, and you’ll be doing the calculations by hand, which significatly increases the risk of human error.

Pay Stubs for Self-Employed Workers

As a self-employed individual, you can pay yourself in many ways depending on your business structure (e.g. sole proprietorship, LLC, S-corp). Many people find that it’s easiest to pay themselves a regular salary just like any other W-2 employee, pay stubs and all. Keeping diligent payroll records helps ensure you’re paying taxes accurately and makes it easier to submit proof of income for a personal loan or any other reason.

Are Fake Pay Stubs Illegal?

A fake pay stub is a fraudulent document that misrepresents income information. While the act of creating counterfeit pay stubs is not illegal in itself, using them for personal gain can lead to costly legal issues. For instance, submitting fraudulent documents on a loan application—like a fake paycheck stub—is a crime that can have serious consequences. Also, a landlord may take legal action against someone who’s submitted forged pay stubs as proof of income to rent an apartment.

Using secure payroll software helps employers prevent payroll fraud and makes creating pay stubs for yourself and your employees a snap. From monitoring everyday payroll data to auditing reports, a centralized system can make all the difference in the financial health of your organization.