You just hired your first employee. Or maybe your second or your fifth. Congratulations on growing your business. Now comes one of the most important responsibilities you take on the moment someone starts working for you: making sure they receive accurate pay stubs every single pay period.
Pay stubs are not just a courtesy. In many states, they are a legal requirement. They are also the foundation of good payroll record keeping and the single document your employees will rely on when applying for a mortgage, renting an apartment, or filing their taxes.
This guide walks you through exactly how to make a pay stub for small business employees in 2026, what information must appear on every stub, how to calculate the deductions correctly, what your state requires, and the fastest way to get it done without expensive payroll software.
What You Will Learn in This Guide
- What a Pay Stub Is and Why Your Business Needs to Provide One
- What Information Must Appear on Every Pay Stub
- How to Calculate Pay Stub Deductions Step by Step
- Pay Stub Requirements by State in 2026
- Pay Stub Formats: Paper, Digital, and Online
- How to Make a Pay Stub for Small Business Employees in 5 Steps
- Pay Stubs for Different Employee Types
- Common Small Business Pay Stub Mistakes
- Frequently Asked Questions
What a Pay Stub Is and Why Your Business Needs to Provide One
A pay stub is a document given to an employee alongside each paycheck that shows a detailed breakdown of their earnings for that pay period. It lists gross pay before deductions, each deduction taken, and the final net pay deposited or handed to the employee.
As a small business owner, you need to provide pay stubs for several important reasons.
Legal compliance: More than half of the US states require employers to provide pay stubs to employees. Failing to do so can result in fines and legal disputes that cost far more than the time it takes to create them.
Employee trust: Employees who can see exactly how their pay was calculated trust their employer more. Transparency in payroll reduces disputes, questions, and turnover.
Tax accuracy: Pay stubs create a paper trail that helps both you and your employees file taxes correctly at the end of the year. Your employees use their pay stubs to verify their W-2 forms. You use your payroll records to file employment taxes on time.
Loan and rental applications: Your employees will need pay stubs when applying for apartments, car loans, and mortgages. Providing accurate stubs protects your employees and reflects well on your business.
Audit protection: If your business is ever audited by the IRS or a state tax authority, complete payroll records, including pay stubs, are your first line of defence.
Related: What Is a Pay Stub? The Complete Beginner Guide
What Information Must Appear on Every Pay Stub
A complete and legally compliant pay stub contains specific information about your business, your employee, and the details of that pay period. Here is everything that should appear on every pay stub you create for your small business employees.
Employer Information
Business name: Your official registered business name exactly as it appears on your tax filings.
Business address: Your primary place of business. If you operate from multiple locations, use the address associated with the employee’s work location.
Employer Identification Number: Your federal EIN is required on payroll documents. If you have not yet obtained an EIN, you can apply for one free at IRS.gov in minutes.
Employee Information
Employee full name: The employee’s legal name as it appears on their Social Security card or official ID.
Employee address: The employee’s current home address which is used for state tax withholding determination.
Employee ID or last four of Social Security Number: Never put a full Social Security Number on a pay stub. Use an employee ID number or only the last four digits for identification purposes.
Filing status: The employee’s W-4 filing status, such as single or married filing jointly, which determines federal tax withholding.
Pay Period Information
Pay period start and end dates: The specific dates this stub covers, such as June 1 through June 15.
Pay date: The date the employee actually receives their payment.
Pay frequency: Whether the employee is paid weekly, bi-weekly, semi-monthly, or monthly.
Earnings Section
Regular hours worked: For hourly employees, the number of regular hours worked during the pay period.
Overtime hours: Any hours worked beyond 40 in a workweek at the overtime rate of 1.5 times the regular rate.
Hourly rate or salary: The employee’s agreed compensation rate.
Gross pay: Total earnings for the period before any deductions are applied.
Year-to-date gross pay: The running total of all gross earnings from January 1 through this pay period.
Deductions Section
Federal income tax withheld: Calculated based on the employee’s W-4 and the IRS withholding tables for 2026.
State income tax withheld: Calculated based on the employee’s state of residence and applicable state tax rates.
Social Security tax: 6.2 percent of gross wages up to the 2026 wage base of 176,100 dollars.
Medicare tax: 1.45 percent of all gross wages, with an additional 0.9 percent for earnings above 200,000 dollars.
Health insurance premiums: The employee’s share of employer-sponsored health insurance is taken as a pretax deduction.
Retirement contributions: Any 401 (k) or other pretax retirement contributions the employee has elected.
Other deductions: Any additional voluntary deductions, such as dental, vision, or flexible spending account contributions.
Year-to-date deductions: The running total of each deduction type from January 1 through this pay period.
Net Pay Section
Net pay: The final amount the employee receives after all deductions are subtracted from gross pay. This is the number that should match the deposit to their bank account or the value of their paper check.
Related: How to Read a Pay Stub: Every Line Item Explained
How to Calculate Pay Stub Deductions Step by Step
The most challenging part of making a pay stub for small business employees is getting the deductions right. Here is the exact calculation process to follow for every pay period.
Step 1: Calculate Gross Pay
For salaried employees: Divide the annual salary by the number of pay periods per year.
For example, an employee earning 52,000 dollars per year paid bi-weekly receives 2,000 dollars gross per period (52,000 divided by 26 pay periods).
For hourly employees: Multiply regular hours worked by the hourly rate, then add any overtime pay.
For example, an employee working 45 hours at 20 dollars per hour earns 800 dollars for regular hours plus 150 dollars for 5 overtime hours at 30 dollars per hour, for a gross pay of 950 dollars.
Step 2: Subtract Pretax Deductions
Pretax deductions are subtracted from gross pay before any taxes are calculated. This lowers the employee’s taxable income.
Common pretax deductions include 401 (k) contributions, health insurance premiums, dental and vision premiums, and flexible spending account contributions.
For example, if the employee above earning 2,000 dollars contributes 200 dollars to their 401k and 150 dollars toward health insurance, their taxable gross drops to 1,650 dollars.
Step 3: Calculate Federal Income Tax
Use the IRS Publication 15-T withholding tables for 2026 to determine federal income tax based on the employee’s taxable gross pay, pay frequency, and W-4 filing status.
For a single filer earning 1,650 dollars bi-weekly in 2026, the approximate federal income tax withholding is around 165 dollars, depending on their specific W-4 elections.
You can also use the IRS withholding estimator at IRS.gov to get a precise figure for each employee.
Step 4: Calculate Social Security Tax
Multiply the employee’s gross pay (before pretax deductions in most cases) by 6.2 percent.
For our example: 2,000 multiplied by 0.062 equals 124 dollars in Social Security tax for this pay period.
Stop withholding Social Security tax once the employee’s year-to-date gross pay reaches 176,100 dollars in 2026.
Step 5: Calculate Medicare Tax
Multiply gross pay by 1.45 percent.
For our example: 2,000 multiplied by 0.0145 equals 29 dollars in Medicare tax for this period.
If an employee’s annual earnings exceed 200,000 dollars, begin withholding an additional 0.9 percent on amounts above that threshold.
Step 6: Calculate State Income Tax
Look up your state’s income tax withholding tables or use your state’s online withholding calculator. State tax rates and methods vary significantly across all 50 states.
Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If your business operates in one of these states, skip this step.
Step 7: Calculate Net Pay
Net Pay equals Gross Pay minus all deductions.
Using our example:
Gross Pay: 2,000 dollars
Pretax deductions: 350 dollars (401k plus health insurance)
Federal income tax: 165 dollars
Social Security: 124 dollars
Medicare: 29 dollars
State income tax: 80 dollars (example rate)
Net Pay: 1,252 dollars
This is the amount deposited into the employee’s bank account or written on their check.
Related: Gross Pay vs Net Pay: What Is the Real Difference?
Also see: Payroll Deductions Explained: FICA, Federal and State Taxes 2026
Pay Stub Requirements by State in 2026
One of the most important things a small business owner must know is whether your state legally requires you to provide pay stubs to your employees, and if so in what format. Requirements vary significantly across all 50 states.
States That Require Written or Printed Pay Stubs
These states require employers to provide a written or printed pay stub with every paycheck. Electronic stubs are only acceptable if the employee has access to a printer and can produce a paper copy on request.
California, Colorado, Connecticut, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, and Vermont are among the states with strict written pay stub requirements.
States That Allow Electronic Pay Stubs
Many states permit employers to provide pay stubs electronically via email or an online portal, provided employees have reasonable access to view and print them. These include states like Arizona, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Virginia, and Washington.
States With No Specific Pay Stub Requirement
A small number of states do not legally require employers to provide pay stubs at all. However, even in these states, it is strongly recommended that you provide pay stubs as a matter of good business practice and employee relations. States in this category include Alabama, Arkansas, Georgia, Mississippi, and Tennessee.
California: The Strictest Pay Stub State
California has the most comprehensive pay stub requirements of any state. Every California pay stub must include the employee’s name and last four digits of their Social Security Number, the employer’s name and address, the pay period dates, total hours worked by non-exempt employees, all applicable hourly rates, all deductions, gross wages earned, net wages earned, and any piece-rate or commission information where applicable.
Violations of the California pay stub law can result in penalties of 50 dollars for the initial violation and 100 dollars per employee for each subsequent violation up to a maximum of 4,000 dollars per employee.
Create a State-Compliant Pay Stub for Your Business at CheckStubGenerator.com
Related: Pay Stub Requirements by State: All 50 States 2026 Guide
Pay Stub Formats: Paper, Digital, and Online
As a small business owner, you have three main options for delivering pay stubs to your employees. Each has advantages depending on your team size, budget, and working arrangements.
Paper Pay Stubs
Paper pay stubs are printed documents handed to employees alongside a paper check or distributed separately when direct deposit is used. They are the most universally accepted format and are required in some states.
Paper stubs are straightforward for very small teams, but become time-consuming to produce manually as your team grows. They also require storage for record-keeping purposes.
Digital or Electronic Pay Stubs
Digital pay stubs are PDF files delivered via email or made available through an online employee portal. Most modern employees prefer digital stubs because they are easy to store, search, and share when needed for loan or rental applications.
Before switching to digital-only delivery, confirm that your state permits electronic pay stubs and that every employee has reliable access to review and print them.
Online Pay Stub Generators
Online pay stub generators like CheckStubGenerator.com allow you to create professional, accurate pay stubs in minutes by entering your business and employee details into a template. The generator handles the formatting and produces a downloadable PDF instantly.
This is the fastest and most cost-effective option for small businesses that do not yet need a full payroll software subscription. There are no monthly fees, no setup time, and no learning curve.
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How to Make a Pay Stub for Small Business Employees in 5 Steps
Here is the exact process to follow every pay period to create accurate, compliant pay stubs for your employees using an online generator.
Step 1: Gather Your Business and Employee Information
Before you create the first pay stub collect the following information for your business and each employee.
For your business, you need your company name, address, and Employer Identification Number.
For each employee, you need their full legal name, home address, employee ID or last four digits of their Social Security Number, W-4 filing status and withholding elections, pay rate (hourly or salary), pay frequency, and any voluntary deductions they have elected, such as 401 (k) percentage or health insurance premium amounts.
Step 2: Determine Hours Worked and Calculate Gross Pay
For salaried employees, confirm there are no mid-period changes, such as a raise or a leave of absence, that would affect the gross pay calculation.
For hourly employees, collect the actual hours worked for the pay period from your time tracking system. Calculate regular hours up to 40 per workweek and any overtime hours separately.
Calculate gross pay using the formulas from Section 3 of this guide.
Step 3: Calculate All Deductions
Work through each deduction in order using the step-by-step method from Section 3.
Start with pretax deductions to arrive at taxable gross. Then calculate federal income tax using the current IRS withholding tables. Then calculate Social Security at 6.2 percent and Medicare at 1.45 percent. Then calculate state income tax using your state’s tables. Then subtract any post-tax deductions.
Keep a running total of year-to-date figures for each line item as you go.
Step 4: Enter Details Into Your Pay Stub Generator
Visit CheckStubGenerator.com and enter all the information you have gathered. A good pay stub generator will:
Show a live preview as you type so you can check every field before downloading.
Calculate year-to-date totals automatically so you do not have to track them manually.
Allow you to choose from multiple professional templates that meet state formatting requirements.
Generate a clean PDF that is ready to email or print immediately.
Step 5: Deliver the Pay Stub and Keep a Copy
Deliver the pay stub to your employee on or before their pay date. If your state requires paper delivery, print and hand it over. If electronic delivery is permitted, send it by email or make it available in your employee portal.
Keep a copy of every pay stub for your own records. Most states require employers to retain payroll records for at least three years. The IRS recommends keeping employment tax records for at least four years.
Start Creating Pay Stubs for Your Team at CheckStubGenerator.com
Pay Stubs for Different Employee Types
Not all employees are the same and different employment arrangements require slightly different approaches to pay stub creation.
Full-Time Salaried Employees
Salaried employees receive the same gross pay amount every period. Their pay stubs are the most straightforward to create because the earnings calculation does not change from period to period unless there is a bonus, raise, or leave adjustment.
The main variable for salaried employees is the deductions section, which can change as they adjust their W-4, change benefit elections, or hit the Social Security wage cap during the year.
Part-Time and Hourly Employees
Hourly employees require you to track and record actual hours worked each period. Their gross pay will vary depending on hours and any overtime worked.
Pay stubs for hourly employees must show the hourly rate, regular hours, any overtime hours, and the separate overtime rate (1.5 times the regular rate). Some states, like California, also require you to list every different hourly rate if an employee earned pay at multiple rates during the same period.
Tipped Employees
If you run a restaurant or any business where employees receive tips, you have additional pay stub requirements. The pay stub must show the employee’s cash wage, any tip credit claimed by the employer, reported tips for the period, and the total gross pay combining wages and tips.
Federal law requires tipped employees to receive a minimum wage of at least 7.25 dollars per hour when cash wages and tips are combined.
Seasonal and Temporary Employees
Seasonal and temporary employees are entitled to the same pay stub rights as permanent employees. Create a pay stub for every pay period they work, just as you would for a full-time team member. Do not assume that a temporary status exempts you from pay stub obligations.
Independent Contractors and 1099 Workers
Independent contractors are not employees, and you are generally not required to provide them with pay stubs or withhold taxes on their behalf. Instead, you issue a 1099-NEC form at the end of the year if you paid them 600 dollars or more.
However, many contractors create their own pay stubs using an online generator for their personal income documentation needs.
Related: Independent Contractor Pay Stub: How to Document 1099 Income
Also see: W-2 Form Generator for Small Business
Common Small Business Pay Stub Mistakes
Even experienced small business owners make these payroll errors. Knowing them in advance helps you avoid costly corrections and potential legal issues.
Mistake 1: Using the Wrong Tax Year Withholding Tables
The IRS updates its withholding tables every year. Always use the current year Publication 15-T tables. Using last year’s tables can cause under-withholding that your employee must make up when they file, or over-withholding that reduces their take-home pay unnecessarily.
Mistake 2: Not Updating W-4 Changes Promptly
When an employee submits a new W-4 form after a life event such as marriage, divorce, or the birth of a child you must update their withholding starting with the very next pay period. Delays in applying W-4 changes can result in incorrect withholding for multiple pay periods.
Mistake 3: Forgetting to Stop Social Security Withholding at the Cap
In 2026, Social Security withholding stops at 176,100 dollars of annual gross wages. If you continue withholding after an employee crosses that threshold, you have over-withheld and are required to return the excess. Set a reminder or use a system that automatically stops Social Security deductions at the cap.
Mistake 4: Misclassifying Employees as Contractors
Classifying an employee as an independent contractor when they legally qualify as an employee is one of the most serious and common small business payroll mistakes. It means you have not been withholding taxes, not providing pay stubs, and potentially not providing legally required benefits. The IRS and Department of Labor take misclassification seriously, and the penalties can be substantial.
Mistake 5: Not Including All Required Fields for Your State
Every state has its own pay stub content requirements. A pay stub that meets federal standards may still be non-compliant in your state. Always check your specific state requirements and make sure your pay stub template includes all mandatory fields for your location.
Mistake 6: Failing to Keep Payroll Records
Creating pay stubs is only half the responsibility. You must also retain copies. The IRS requires employers to keep employment tax records for at least four years. State requirements vary but most require at least three years of payroll records. Store pay stubs digitally in a secure, backed-up location.
Mistake 7: Rounding Pay Incorrectly
Always round tax withholding amounts to the nearest cent using standard rounding rules. Do not round up to the nearest dollar or use approximations for convenience. Small rounding errors across many employees and many pay periods add up to significant discrepancies by year’s end.
Frequently Asked Questions
Do small businesses legally have to provide pay stubs?
It depends on your state. More than half of the US states require employers to provide pay stubs to employees. Some states require paper stubs while others allow electronic delivery. A small number of states have no specific requirement. Regardless of your state, it is strongly recommended that you provide pay stubs every pay period to protect your business and support your employees.
How much does it cost to make pay stubs for employees?
Using an online pay stub generator like CheckStubGenerator.com is one of the most affordable options available to small business owners. You can create professional, accurate pay stubs for a fraction of the cost of full payroll software. There are no monthly subscriptions and no setup fees.
Can I make my own pay stubs as a small business owner?
Yes. Small business owners can legally create their own pay stubs as long as the information is accurate and includes all required fields. Using a professional online generator ensures your stubs are correctly formatted and contain all the legally required information for your state.
What is the difference between a pay stub and a paycheck?
A paycheck is the actual payment instrument, either a paper check or a direct deposit notification. A pay stub is the detailed breakdown that accompanies it, showing how gross pay was calculated and what deductions were taken. Every employee should receive a pay stub with every paycheck.
How do I create pay stubs for hourly employees?
For hourly employees, you need to track actual hours worked each period, calculate gross pay based on hours and rate including any overtime, then apply all the standard deductions in the same way you would for a salaried employee. An online pay stub generator makes this process fast and accurate by doing the math for you once you enter the hours and rate.
How long do I need to keep employee pay stubs?
The IRS recommends keeping employment tax records, including pay stubs, for at least four years from the date the tax was due or paid, whichever is later. Many states require three years minimum. It is good practice to keep payroll records for at least five years to protect yourself in any potential audit or legal dispute.
Do I need to provide pay stubs to part-time employees?
Yes. Part-time employees have the same pay stub rights as full-time employees. If your state requires pay stubs, it requires them for all employees regardless of whether they are full-time, part-time, temporary, or seasonal.
Can employees request pay stubs from previous pay periods?
In most states, employees have the right to request copies of their pay stubs. Employers are typically required to provide them within a reasonable time frame. This is another reason why maintaining complete digital payroll records from the start of employment is so important.
What happens if I make a mistake on an employee’s pay stub?
Correct the error as soon as it is discovered. Issue a corrected pay stub clearly marked as an amendment. If the error resulted in the wrong amount being paid to the employee, either make up the difference in the next paycheck or arrange a separate payment. Notify the employee promptly and document the correction in your records.
A Simple Pay Stub Checklist for Small Business Owners
Use this checklist every pay period to make sure every stub you create is complete and accurate.
Business and Employee Information
Your business name and address are correct and match your EIN registration.
Employee name matches their legal name on file.
Employee address is current and reflects their state of residence for tax purposes.
Pay period start date, end date, and pay date are all correct.
Earnings Calculation
Gross pay has been calculated correctly for salaried or hourly status.
Overtime hours have been identified and calculated at 1.5 times the regular rate.
Any bonuses or commissions have been included and are clearly labelled.
Deductions
Pretax deductions have been subtracted before tax calculations.
Federal income tax has been calculated using the 2026 IRS withholding tables.
Social Security has been calculated at 6.2 percent and stops at 176,100 dollars YTD.
Medicare has been calculated at 1.45 percent plus any applicable surtax.
State income tax has been calculated using your state’s current tables.
All voluntary deductions match the employee’s current elections on file.
Year-to-Date Figures
YTD gross pay, YTD deductions, and YTD net pay have all been updated correctly.
Delivery and Record Keeping
Pay stub has been delivered on or before the pay date in the required format for your state.
A copy has been retained in your payroll records.
More Resources for Small Business Owners at CheckStubGenerator.com
Create Pay Stubs for Your Small Business Employees Right Now
You now have everything you need to make accurate, legally compliant pay stubs for every employee on your team. The fastest way to put this into practice is to use a professional online generator that handles the formatting, calculations, and PDF generation for you in minutes.
Create My Employee Pay Stubs Now at CheckStubGenerator.com
View Free Pay Stub Templates
For legitimate payroll documentation only. Always ensure all figures accurately reflect the actual wages and deductions for each employee
