Steps in creating paystub for your employees:
- Collecting Data – % values, Deductions, State Tax code, Federal Tax code
- Working with Excel – Equations, Calculations
- Creating a pretty template – Layout, drawing, etc
- Usage of online tools
- Printing
So, this is part one, and we will be looking at collecting data. Before you can make calculations, you need to know the deductions and payment amounts from the government, and the IRS, so you can know how much % to take out. You also need to know what the pay stub tax brackets are.
You also need to know the federal taxes. They are as follows- (from left t right)
TAX BRACKET FOR:
| Single | Married | Head of Household | Marginal tax |
|---|---|---|---|
| $0+ | $0+ | $0+ | 10% |
| $8,925+ | $17,850+ | $12,750+ | 15% |
| $36,250+ | $72,500+ | $48,600+ | 25% |
| $87,850+ | $146,400+ | $125,450+ | 28% |
| $183,250+ | $223,050+ | $203,150+ | 33% |
| $398,350+ | $398,350+ | $398,350+ | 35% |
| $400,000+ | $450,000+ | $425,000+ | 39.6% |
You can use this table to figure out the Marginal tax rate that you pay the federal government.
Continuing on.. you now need to know your state tax values and each bracket. Next, you’ll need to get the numbers for the standard deductions, like Medicare, Social Security, and the like.
This is summed up below:
- Social Security tax withholding (6.2% up to the annual maximum)
- Medicare tax withholding (1.45%)
- Additional Medicare tax withholding (0.9%) for employees earning over $200,000 (this is a new tax withholding requirement starting in the year 2013)
Now we have most of the external information. the only thing that is left for your pay stub, is for you to make a decision on the other deductions that you will have. This is completely based on what you think your company would deduct.
For Example:
- Cell phone
- Medical Insurance
- Union Dues
- Garnishments
- Car allowance
- Loss of License Insurance
The list can go on and on.. and is very specific. This is a level of complexity that you need to decide.
So, once you have all these numbers, you are ready for the next step on how to make a pay stub. If you know Excel, this will be easy. If you don’t, well, this will be a good lesson in excel.