Pay stubs are often issued to employees by their employers. The documents outline the amount of money earned from work, including taxes and other deductions.
However, being a sole proprietor, small business owner, or an independent contractor such as a freelancer doesn’t mean that you should miss out on all the benefits that come with having a pay stub. You can always generate your own paycheck stubs online, thanks to modern technology.
Below are five reasons why freelancers and other self-employed individuals should create their pay stubs.
They act as proof of income.
As a freelancer, you may want to apply for a personal loan or a mortgage. Most financial lenders will require loan applicants to prove their income before having their loan application approved. For employed individuals, current pay stubs are generally more acceptable as proof of payment by most lending institutions.
For a freelancer, generating customized paycheck stubs using an online paystub maker can ensure that you get legit proof of income. However, you must have your bank statements to back up your income.
Self-generated pay stubs make the tax filing process easier.
The tax season can be challenging for everyone, especially freelancers, and anything that can make the process less overwhelming is always welcome.
A paystub generator is one of the tools that independent contractors can use to simplify their tax processing. A paycheck stub allows you to list your pay and all the deductions withheld by your clients.
Additionally, a pay stub allows you to categorize business-related expenses such as plane tickets, call expenses business meals that are tax-exempt, simplifying the work for your accountants when filing your taxes.
They help keep financial records tidy.
As a freelancer, you want to dedicate as much time as possible to serving your clients and meeting your goal. Having disorganized financial records can be a huge drawback.
Fortunately, generating pay stubs is an excellent way to tidy up your financial records and keep track of hours spent on specific projects.
The best practice would be to create separate pay stubs for every project you undertake. That way, it becomes pretty easy to provide reliable evidence if any dispute about the payment arises in the future.
It can help you in setting prices.
Most freelancers price their work per hour or on a per-project basis. Whatever your billing system is, a pay stub can help you get a clear picture of how much you make for a particular project.
For example, if you bill your work on a project basis, you can customize your pay stub to show the number of hours spent on the project. As a result, it becomes easy to determine if your pricing for the project is correct or if you are selling yourself short. That means you can always adjust your pricing for future projects to ensure that it matches the number of hours spent on a specific type of project.
They are cheap and easy to make
The best thing about pay stubs is that they are super easy and cost-effective to generate. Most pay stub maker platforms are free to use and do not require you to install complex and costly desktop software, meaning any independent contractor or self-employed individual can use them.
If you’re looking to manage your finances and your taxes effectively as a freelancer, creating your pay stubs can be an excellent starting point. Considering the amount of money you could potentially lose through sloppy record-keeping, there is no reason why you should start creating your own pay stubs.