If you have decided to pay employees or contractors through electronic funds transfers (EFT), you may have some questions, like “How do I create a pay stub for an EFT transfer?” and “Do I really need to create a pay stub for an EFT transfer?” Keep reading to learn why you need to create pay stubs regardless of the payment method and how you can easily create one for an EFT transfer.
The Importance of Creating Pay Stubs for EFT Transfers
When you initiate an EFT transfer, the money goes directly from your bank account to your employee’s or contractor’s bank account. Most people refer to this type of payment method as a direct deposit. By paying people through EFT transfers, you create a backup record of the payment. However, that doesn’t mean you shouldn’t still provide a pay stub. There are several reasons why you should always provide a pay stub to both employees and contractors.
Nowadays, for most everything, people need to provide proof of income. Whether it be for renting a house or apartment, buying a car, or getting a loan, this is why you need to provide both employees and contractors with a pay stub. It is also a legal requirement in most states.
Backup Records & Tax Compliance
While you may have a record of the payment through your bank statement, it is essential to always have backup records. Especially when it comes to payroll. By keeping a copy of all pay stubs you issue, you will have backup records to turn to if something was to happen to your accounting software.
Providing and keeping a copy of all pay stubs also benefits you in the case of an audit. Having pay stubs is the perfect way to show that your business is compliant with both state and federal tax laws. Using our pay stub generator, your taxes will be automatically and accurately calculated. This is a big help for small businesses, especially those that are just starting out as taxes can be confusing. We take the work and worry out of the equation.
How to Create a Pay Stub for EFT Payments
Creating a pay stub for EFT payments is almost identical to creating a regular pay stub. Use these steps for using our software to easily generate pay stubs for EFT payments.
- Fill out the company information section. You will need to provide your company name, phone number, social security number (SSN) or employer identification number (EIN), and your address. It is important to triple check this information for accuracy.
- Fill in all employee information. You will need to include your employee’s name, address, SSN, state, employment status (employee or contractor), marital status, number of dependents, and number of tax exemptions. This information should have been provided by your employee when they filled out a W2. If they don’t have one, they can use a W2 generator. Some of this information will not apply to a contractor, since you typically won’t be withholding taxes or them.
- Input Salary Information. Next, you will need to fill out will be the employee’s or contractor’s salary information. You will first need to choose whether they are paid a salary or hourly. Fill out the hourly or annual salary wage as applicable, including overtime, any holiday and vacation pay, and bonuses. Then, pick the dates for the pay period, the pay date, and check the circle indicating this was a direct deposit. Once you check this circle, a new box will appear where you will input the last four digits of the recipient’s bank account number. Deductions will automatically be calculated once you provide all this information.
- Preview your stub for accuracy. The last thing you need to do is preview the pay stub and ensure that all information you have provided is accurate. Once you are satisfied, simply click the check out button to make your purchase!