Independent Contractor Pay Stub - Proof of Income for Independent Contractor
Becoming one of the many full-time independent contractors, freelancers, or generally self-employed people in our workforce (that is, working a job for yourself as your own company) is a coveted position.
Many people aspire to have the type of freedom and liberty that contractors enjoy. Yet there are certain things to keep in mind and be responsible for when it comes to your payments and money exchanges as a freelancer while using an online tool to generate pay stub for your paycheck.
In addition to the basic necessity of tracking your payments information, one question you will have to answer is how to obtain an independent contractor pay stub. It is best practice to monitor and track a freelancer's earnings by creating contractor pay stubs.
Read on for information about what defines an independent contractor, what a paystub actually is, what information you can find on them, and how to spot a pay stubs creator that will generate pay stubs that suffice your needs and exceed your expectations.
Who Are Independent Contractors?
Before we start thinking about what independent contractors need to consider regarding pay stubs, let's define what type of people independent contractors are.
There are many differences between those that are freelancers and traditional employees.
Traditional employees hired by employers work a set schedule for usually only one employer and receive health and other benefits like sick or vacation pay. It is typical for a business to also have their employee's taxes deducted by their payroll provider within the company and provide the equipment necessary for the employee to perform their work. In many companies, workers receive a money payment at a set salary rate.
Contractors, however - the folks who will need to create freelancer pay stubs - can work for more than one company at once. They are in charge of their own schedule and supply their own equipment. They do not receive any benefits like the traditionally employed, but they can accept or decline offers for work at their discretion.
Freelancers may have low income or high earnings, depending on their trade and how often they work. They usually don't have a set salary, and get paid per job or project.
Lastly, it is essential to note that freelancers file their own taxes and track their deductions. This group of people will need to create an independent contractor pay stub.
General Pay Stub Information
Many people have questions about what an independent contractor pay stub actually is, so let's start with an overview of pay stubs.
Pay stubs are a type of form given to employees or generated by freelancers to provide details about wages for services provided. Employers widely use them to communicate specific information to their employees.
A pay stub form provides a record-keeping function for any period you were paid, providing your payment history. Usually attached to a paycheck via perforation, this document itemizes year-to-date information.
Paystubs also record the hours worked by employees, giving the employers an easy and helpful insight into their employees' hours worked. Pay stubs provide evidence of finances, tax information, and any other deductions that the employee has elected for.
What Information Can You Find on a Paystub?
Contractors often wonder what type of information to track their wages on a pay stub form. There are a few universal elements that you should incorporate into your contractor pay stubs for any given pay period. Let's take a look at them:
Employee Information: This data includes the worker's full legal name, social security number, and address.
Pay Period: This information explains the most recent wage period for the employee.
Employee Pay Rate: This number shows how many funds per paycheck the employee earns.
Gross Wages: Gross pay is wages earned before tax deductions.
Taxes Being Withheld: The information covers local, state, and income tax payments.
Net Pay: This number is the take-home amount on the contractor pay stub.
These elements work together to generate effective and professional independent contractor pay stubs.
A freelancer may notice certain abbreviations on a pay stub to break down the deductions further. These are difficult to determine the meaning of unless you are a payroll manager.
However, it is crucial to know these abbreviations as you create your contractor pay stubs. Here are some standard abbreviations found on a pay stub:
FED TAX: Federal Income Tax withheld
STATE TX: State Income Tax withheld
MEDICARE: Federal Medicare withheld
ERA: Educational Retirement Act Contributions
FICA: Employees Portion of Paid S.S.
These five items are the common deductions found on most paystubs.
Why Is It Important for Contractors to Track Their Stubs?
Your own pay stubs aren't just pieces of paper telling you how much someone has paid you. In fact, they are crucial documents needed for a variety of reasons. Explore below some top reasons why contractor pay stubs are vital.
Proof of Finances
One of the central goals of a paystub is to communicate your evidence of finances. As you may already know, presenting your verification of finances is a requirement for a variety of steps you may want to take in your life.
For example, when looking to rent an apartment, you will likely be asked for authentication of finances so the landlord knows you can afford the place. Perhaps you want to purchase a new car, apply for a credit loan, or take out a home loan. Either way, freelancers need to generate a pay stub for these situations.
Freelancers face a feat when it comes to tax season. Creating independent contractor pay stubs ensures a more organized system for tracking your expenses, which will make it easier for you to begin filing your taxes.
Things to Look for in an Online Paystub Generator
Several online independent contractor pay stub tools claim to generate and create pay stubs for your paycheck. Usually, these services begin with some basic questions for you to fill out.
However, before you start providing your personal and financial information, you need to ensure it's a trustworthy company that produces legal stubs. It is up to freelancers to sift through the options and find the best resource to create their independent contractor pay stub and print it. Or, you can start with our services here!
Still, it's good to consider the options. Below are some things to think about when choosing an online program to create professional pay stubs. Keeping these things in mind will benefit you when generating pay stubs, so you can hopefully print yours today!
Also read: How to Get Free Pay Stubs Online
Customer Service Accessibility
Some online pay stub generators do not offer robust customer service options, which can pose a problem for freelancers attempting to create an independent contractor pay stub with a short turnaround. Running into technical difficulties can threaten your aim, and not having customer service available could be very inconvenient.
Luckily, here at The PayStubs, our online stub generator provides three methods of communication to our customer service team, plus a 24/7 call service.
Does It Provide You with Evidence of Finances?
One of the main concerns for freelancers is whether they'll be able to produce verification of pay using online pay stub generators.
It is essential to do your research and ensure that the stub generator you're working with actually tracks your wages in a clear and informative manner, much like how our program will print off a professional and accurately calculated paystub.
Also read: What Should I Do If My Employer Won’t Provide A Pay Stub?
Does It Auto-Populate? Are There Templates to Choose from?
Good online generators will ask you for your financial and personal basic information in a form for you to fill out and then run the data through their system to auto-populate the fields on the pay stub. They will automatically calculate your wages and deductions.
Furthermore, check to see if the pay stub creator supports differing templates - like here at The Pay Stubs - so you can have more control of the final outcome. Make sure you can add your company logo as well!
Having the opportunity to be one of the many self-employed independent contractors in our nation is an exciting adventure teeming with possibilities. It also means being more intentional about your financial records. Using a contractor pay stub, freelancers can track their tax information and provide evidence of finances for the big moments in life, like renting a home or applying for a credit card.
Paystubs allow you to record your gross pay, net pay, and deductions throughout the year. They itemize essential information like the pay period and your pay rate.
Pay stubs that track independent contractors' wages make it easier to file taxes yearly, and they also work as evidence of finances. Of course, be sure to look for a verified pay stub generator to handle these crucial documents.
Using a reputable online pay stub generator to create a pay stub is a good investment in your future. Getting prepared before you are asked for proof of wages as a freelancer is a prudent idea - so get started with The Pay Stubs today!