By the end of October 2021, the number of self-employed workers in the United States. 9.44 million American adults were unincorporated, self-employed individuals, according to the Census Bureau.
Moreover, over 400,000 Americans submitted applications to officially form a business that month. Most frequently, people applied to form a sole proprietorship, a partnership, or an LLC.
People work independently now more than they ever have. If that describes you, it might be worth your while to learn how to make a pay stub.
A pay stub is a useful document. You can use it to maintain the three core financial documents your business needs. And, it can provide proof of income if you apply for a loan.
But what exactly is a paystub? And how can you learn to make one yourself if you don’t have an employer?
What Is a Pay Stub?
A pay stub is a document that conveys financial information in a set period of time. Each pay stub covers one pay period. An organization with W2 employees typically generates a pay stub every time it pays wages.
A pay stub is unique to each employee. It includes the following information:
- Date of the pay period
- Employing organization’s full legal name
- Employing organization’s address
- Employee’s full legal name
- Employee’s address
- Employer’s ID number (EIN)
- Employee’s ID number (SSN or ITIN)
- Gross income employee earned in the pay period
- Taxes withheld (income, FICA, state, local)
- Contributions (to HSA, retirement fund)
- Deductions (for insurance premiums)
- Employee’s net pay after withholdings and deductions
Can I Make My Own Pay Stub?
You can make your own pay stub if you are self-employed. You are self-employed if you are a freelancer, and you provide services under a 1099 contract.
Or, you may be self-employed if you are a small business owner. As a business owner, you may pay your own salary through a W2 or 1099.
Self-employed pay stubs for business owners are legal and relatively easy to make.
You may also pay yourself inconsistently through an owner’s draw. This is not recommended in most circumstances.
But, with payroll software, you can reverse-engineer paychecks from your balance sheet documenting your owner’s draw. From there, you can still generate a pay stub.
If you are an employee of an organization, and you receive a salary or wage, you can’t generate your own pay stub.
You need to get your pay stubs from your employer. You might talk to HR or the payroll department to request your stubs.
How to Make a Pay Stub Online
You can make pay stubs through specialized self-employed payroll software. But, you can also learn how to make pay stubs online, all you need to do is search for an online pay stub creator.
To do this, use an online paystub generator. Fill in all the information for a given pay period.
No Business Name or EIN
If you are self-employed and do not have a separate legal name for your business, you can use your name. This is the default if you run a sole proprietorship.
Sole proprietorships are, themselves, the default structure for self-employed work. This is what your work is unless you’ve filed as something else.
If you have no employees, you do not need an EIN. Your SSN should be fine.
Tax Withholdings and Deductions
Ideally, you withhold the self-employment tax from your own salary and pay it quarterly to the IRS. But, if you haven’t done so this pay period, leave that deduction off the pay stub.
To determine exemptions, read your state’s tax guides. You can also explore the Self-Employed Tax Center on the IRS website.
Gross Earned Income
To determine your gross earned income in a pay period, you can divide your annual income by the number of pay periods. This is easiest if you are paying yourself a salary.
If you aren’t paying yourself a salary, you may need to calculate gross earned income for a given pay period. Add up the total revenue of all sales in the pay periods (or, the total revenue of payment from clients for services rendered).
Then, subtract the cost of goods, refunds, and other business expenses spent in the pay period. The difference is your gross earned income for that pay period.
As a self-employed individual, it’s good to know how to make a pay stub for yourself. And it’s never been easier to make one.