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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteTo create an employee pay stub, gather the pay-period dates, payment date, verified hours and rates, earnings, and authorized deductions; calculate gross pay and withholding under the rules that apply where the employee works; then show itemized deductions and net pay. Keep the supporting payroll records as well as the statement. Federal recordkeeping rules do not establish every state or local rule for what an employee’s statement must show or how it must be delivered, so check the employee’s work location before using a generic template.
What a small-business pay stub should show
A useful statement lets an employee see how the business arrived at take-home pay. Include clear labels and identify the period covered and the date wages were paid.
- Employee and pay-period details: employee name, pay-period start and end dates, and payment date. Keep sensitive identifiers such as a Social Security number secure; a full SSN is not needed on the statement simply because it is used in payroll records.
- Earnings: gross wages, with the basis and relevant details such as hours, rates, overtime, salary, tips, commissions, or piece-rate earnings as applicable or required.
- Deductions: itemize tax withholding and other applicable, authorized deductions, such as benefit deductions.
- Net pay: the amount payable after deductions.
- Useful reconciliation details: current-period and year-to-date totals can help employees follow earnings and withholding. The federal sources cited here do not establish these totals as a universal pay-stub requirement.
For covered nonexempt employees, the U.S. Department of Labor’s recordkeeping list includes identifying information, workweek start, daily and weekly hours, wage basis, regular rate, straight-time and overtime earnings, additions and deductions, total wages per pay period, payment date, and the covered period. That list is a federal recordkeeping baseline, not a complete statement of every state’s employee-facing requirements. See DOL Fact Sheet #21.
How to create a pay stub, step by step
- Set up a payroll record. Record the employee’s pay basis, regular rate, workweek start, and identifying information. Keep time records and other materials that support the wages paid. Secure personal data and limit access to people who need it.
- Close the pay period. Confirm the dates covered and payment date. Reconcile time records, including daily and weekly hours, and account for applicable paid leave, tips, commissions, piece-rate units, or other compensation.
- Calculate gross earnings. Apply the employee’s pay basis and rates, including overtime where required. Preserve the workweek calculations and wage basis so the amount can be explained later. Do not assume that salary alone makes an employee exempt from overtime.
- Calculate withholding and deductions. Use the employee’s current tax-withholding information and the applicable federal, state, and local rules, along with authorized benefit or other deductions. Check current tax guidance for the payroll date: the IRS Publication 15 (Circular E) for 2026 is the federal employer tax reference for that year, and state and local tax authorities may also apply.
- Prepare the statement. Show gross wages, itemized deductions, and net pay, with the pay period and payment date clearly identified. Include hours, rates, overtime, and other pay details where applicable or required.
- Review and deliver. Check that gross wages minus deductions equal net pay, and verify the employee and pay period. Deliver the statement using a method and schedule permitted in the employee’s jurisdiction. Confirm local requirements for content, frequency, language, employee access, and electronic consent.
- Retain the supporting records. Keep the final payroll record along with time and wage-calculation materials for the applicable retention periods. Check whether state rules require longer retention.
Choose a spreadsheet or a payroll service
Either can be appropriate for a small business; the key difference is how much calculation and administration the business handles itself. A spreadsheet organizes records but does not make payroll correct by itself. A provider may perform more tasks, but outsourcing does not automatically remove the employer’s responsibility for employment-tax compliance.
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| Consideration | Spreadsheet or paper ledger | Payroll service |
|---|---|---|
| Calculations and tax updates | The business maintains formulas and must apply current wage and tax rules. | May calculate payroll and update tax tables, depending on the arrangement; confirm what is included. |
| Filing and payments | The business handles required filings and deposits. | May prepare forms, filings, or federal tax deposits; confirm exactly which tasks the provider performs. |
| Records and access | Keep a secure, backed-up file with an audit trail and clear earning and deduction categories. | Ask what records can be exported, how long they remain available, and how corrections are documented. |
| Review and responsibility | Review calculations each pay period and reconcile the results. | The employer still needs to understand the arrangement, monitor compliance, and respond to notices. |
| Cost and state coverage | Setup and recurring costs depend on the business’s own time and tools. | Pricing and support vary; verify costs and support for every state where employees work. |
If using a spreadsheet, use consistent employee records, protect formula cells, separate earnings and deduction categories, reconcile each run, and keep a secure backup. An optional payroll register book can help organize records, but it does not calculate taxes or create a compliant statement on its own.
Before choosing a service, ask who files and pays each tax, whose account receives agency notices, how deposits are monitored, how errors are corrected, and what payroll records the employer can retrieve. IRS guidance explains that a third-party provider’s involvement generally does not relieve the employer of responsibility for timely employment-tax filing and payment. Review the IRS guidance on outsourcing payroll duties and confirm the terms of the specific arrangement.
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Federal payroll record retention
DOL guidance generally calls for keeping payroll records for at least three years and records used to compute wages for two years. Wage-computation records can include time cards, rate tables, schedules, and records of additions or deductions. Retain the materials needed to explain the calculation, not just the final statement. The DOL recordkeeping fact sheet describes these federal periods; check state requirements for any longer period that applies.
Check state and local rules before relying on a template
Federal DOL rules say covered employers must keep accurate records, but they do not settle every employee-facing pay-statement requirement. Requirements can depend on where the employee works, including what information must appear, how often wages must be paid, when and how statements must be delivered, and whether electronic delivery requires consent. Check the relevant labor department and tax authority for each work location. Do not treat a generic spreadsheet or payroll-service template as compliant until those location-specific rules have been checked.
Use official examples for the right purpose
The IRS’s Publication 4268 (revised August 2022) illustrates payroll stubs and a sample ledger with items such as hours, hourly rate, gross pay, Social Security and Medicare, federal and state withholding, insurance, other deductions, and net pay. It also notes that a spreadsheet can be designed when a system does not track those items. Use it as an illustration of record layout, not as a source for current tax rates or thresholds; use current-year IRS and state/local guidance for calculations.
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