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A pay stub is a common document issued to the employees at the end of every pay period.
For self-employed individuals, no one gets to issue these financial documents. However, that doesn’t mean self-employed people will not need paycheck stubs, and that is where a pay stub generator comes in.
Here are six reasons why self-employed individuals need a paystub generator
You will want to be able to recognize and report revenue growth in your tax return
Self-employed individuals like freelancers work on different jobs or contracts at any given time. In other words, they can draw a salary from many different sources.
Without a clearly defined method of tracking their various sources of payments, it may be impossible to keep track of revenue growth, resulting in errors when filing taxes.
Fortunately, self-employed individuals can use an online paystub generator such as ThePaystubs to create paycheck stubs themselves. That way, it becomes easier to recognize and accurately report revenue growth, minimize errors and ensure that you comply with tax rules.
Paystubs show income and deductions that make tax filing easier.
Tax filing can be complicated, especially if you have many sources of revenue. Using a paystub creator to self-generate a paystub for every job or contact completed helps itemize your gross earning, tax deduction withheld by your clients, and the net earnings.
This, in turn, helps simplify your accountant job when preparing your tax returns because you can easily account for earnings and tax deductions from every source simply by looking at your paystubs.
If you have a side business, you may want to use it to better report gross receipts.
Gross receipts often include all forms of revenue received or accrued from whatever source. It is considered as total income.
If you have a side business, any income you generate from the business in terms of payment for services offered must be reported to the IRS alongside your other sources of income for tax purposes.
With a paystub generator, you can create paystubs for all payments received, simplifying the process of reporting your gross receipts to the IRS. By summing up the total earnings as indicated in the paystubs from every contract gives the total income from your side business.
It may prevent you from receiving a big tax bill or penalty in the future.
When filing your tax returns, errors are not unlikely. When they happen, they can result in huge tax bills or even hefty fines in extreme cases. The good news is that generating pay stubs for every contract or job done means that you keep track of your earnings and tax deductions.
That way, you can avoid costly mistakes when filing your taxes because your accountant will have to depend on the accurate information on your paystubs when filing your tax returns. Filling your tax returns correctly will help minimize the chances of receiving a big tax bill or penalties.
You may want to use it for payroll purposes (perhaps if your sub-contract)
As your business grows, you may need to take in new hires. Taking in new hires means you will need to issue them with paystubs as part of payroll processing.
At other times you may need to outsource or subcontract. Having a paystub generator ensures that you are compliant with the law, mainly if you are based in a state that requires all employers to issue paycheck stubs to their employees after every payment period.
Whether you work alone or have just a few employees, the need for a paystub generator cannot be overstated. The right solution will help you track your earnings and deductions for auditing purposes or even personal loan applications.