Individuals who reside in the United States and have a status of a self-employed worker might be familiar with the paper called Independent Contractor Pay Stub Template. If you are an independent contractor and have never heard of that form, you should know this is an essential document for you that serves various purposes.
Generally, a pay stub is a list of earnings and deductions an employee in the US gets from their employer. However, self-employed people do not receive any of such forms. As you might know, there are principal differences between self-employed people and those who work for just one organization.
For example, workers with one employer can get various perks and have only one job. Usually, those who work as independent contractors have only one income source: their wage. They have no such benefits as medical insurance or retirement plans supplied by employers. However, such contractors are free to choose offerings and decline them if they are not interested.
According to a survey by Gallup in 2020, around 30% of American residents were self-employed. Because of coronavirus and staff reduction in a huge number of organizations worldwide, including the US, it is presumed that the number of self-employed citizens might have grown.
So, if you are an employee and work for one entity, you are furnished with a pay stub in a certain period. But if you are an independent contractor, typically, no one prepares any pay stubs for you, and you should draw them on your own. Each such template contains:
You, as a contractor, have to fill out a template for each client that transfers the money to you for rendered services. It will help you keep track of all your earnings and not get confused when your tax payments are due.
Even if it seems complicated to create the document for each income you get, or you are too lazy to deal with paperwork, always remember that when the time for taxes comes, you will be all set with pay stubs and will not need to check all your receipts or bank account statements. So, we strongly recommend you start gathering pay stubs and keep them in your drawer.
Every time your work is done, and you receive a wage, you had better create a pay stub to reflect all the details about the money received. The template is relatively transparent, contains only one sheet, and probably will not take much of your time. You can see the guide about the form below.
Find the Relevant Template
It is a good idea to have a sample that you can use to make your own document or even a template you can fill out. Try our user-friendly form-building software that can generate the Independent Contractor Pay Stub Template, among other documents. You will have all the fields you should complete right in front of you.
Identify the Client
In the very beginning, you should write the client’s name and address on the left, regardless of the client’s type (an individual or organization).
Enter Your Personal Details
You have to insert your name, social security number (SSN), employee ID (if any), the number of the paycheck you have received (if there was a paycheck), pay period, and pay date.
Define Your Wage
After inserting your details, proceed to the following block, where you will see a chart. In the left column, you should describe your gross wages. Typically for all pay stubs, it is possible to write your rate per hour and the number of working hours you have had. Then, you should multiply those numbers and get the “current total.” It is current because after this step is completed, you will define various deductions.
Sometimes you get a fixed wage that is not linked with the number of hours you have spent working. In this case, you can write the total wage without hours.
Describe the Deductions
A part of your wage will be cut because of taxes you have to pay. If you are a self-employed person for a while, you probably know how to count your deductions. If not, we recommend getting a consultation from a tax professional who will help understand the exact amount. You have to insert the current total and “year-to-date” total.
Determine the Net Amount You Get
Under the chart, you can see a line with six numbers where you will count the net sum you get from the client. On the left, write all “year-to-date” amounts: gross pay, deductions, and net sum. On the right, insert the same info but only for the considered period.
Because a pay stub is a document given to an employee, you have to store your pay stubs in your archives (because you, in a way, are an “employee,” too). There are at least two reasons to create and keep all such forms:
Banks and financial institutions that give credit to citizens are always hesitant about people who have low income or have no income. Highly likely, individuals in such a situation will not get any tiny little credit, let alone a mortgage or any other significant amount of money. If you have a set of pay stubs demonstrating stable revenues and regular money transfers, your request for a loan will probably be approved.
If your client tries to cheat with their own taxes or has any problem with its accounting, you, as a contractor, will not face any consequences because you have a pay stub. You can show it as proof of money given to you from a certain entity or person if needed.
The answer is: no, you should not. You can use them to define taxes and pay them with ease. You are not required to send your pay stubs to any legal body or authority. However, in some cases, you must show them to the US Internal Revenue Service (responsible for taxation procedures in the country) or any other relevant public authority if they have any questions or concerns about your tax payments.