# How to Make a Pay Stub for a Small Business (Step by Step) > A small business pay stub takes seven pieces of information: employer and employee details, the pay period, hours or salary, gross pay, taxes, deductions and net pay. Here is how to build one correctly in 2026. Source: https://www.paystubnest.com/blog/how-to-make-a-pay-stub-for-a-small-business Published: 2026-10-29 Publisher: PayStubNest.com Author: PayStubNest Team Category: Payroll Tags: pay stub generator, small business payroll, how to Reading time: 5 min ## Short answer To make a pay stub for a small business, collect the employer and employee details, the pay period and pay date, hours and rate (or salary), then compute gross pay, withhold federal income tax, Social Security (6.2%) and Medicare (1.45%), apply state withholding where your state has one, subtract any deductions and show net pay with year-to-date totals. A pay stub generator with current tax tables does the arithmetic; you supply the facts from your own payroll records. Every pay stub answers the same question for an employee: how did the gross amount I earned become the amount that reached my bank account? For a small employer, producing that document does not require payroll software with a monthly fee. It requires accurate inputs, current tax rates and a consistent format. This post walks through the seven steps and the mistakes to avoid. ## Step 1: Gather the employer and employee details The header of a pay stub identifies both parties. For the business, use the legal name (and the trade name if you use one), the address and, if you like, the Employer Identification Number (EIN). For the employee, use the name on their Form W-4, their address and an employee number if you assign one. Many employers print only the last four digits of a Social Security number, or none at all; a pay stub does not need the full number to be valid. ## Step 2: Set the pay period and pay date A pay stub covers one **pay period** (for example, Monday October 5 to Sunday October 18) and shows the **pay date** on which the wages are paid. The two are different: the pay date is usually a few days after the period ends. Keep the schedule consistent, because year-to-date totals, overtime and tax withholding all depend on it. If you are still choosing a schedule, our guide to [weekly, biweekly, semimonthly and monthly pay](https://www.paystubnest.com/guides/pay-frequency-compared) compares them. ## Step 3: Record hours and rates, or the salary For hourly employees, list regular hours and the hourly rate, then overtime hours and the overtime rate separately. Under the federal Fair Labor Standards Act, non-exempt employees earn at least 1.5 times their regular rate for hours over 40 in a workweek, and some states add daily overtime. For salaried employees, show the salary for the period (the annual salary divided by the number of pay periods in the year). Bonuses, commissions, tips and reimbursements each get their own line so the totals stay traceable. See [hourly vs salaried pay stubs](https://www.paystubnest.com/guides/hourly-vs-salaried-pay-stubs) for worked examples. ## Step 4: Compute gross pay Gross pay is the sum of every earnings line before anything is taken out. For an hourly employee who worked 80 regular hours at $22 and 4 overtime hours at $33, gross pay is $1,760 + $132 = $1,892. Write this figure down; every later step refers to it. ## Step 5: Withhold taxes Three federal amounts come out of almost every paycheck: - **Federal income tax**, based on the employee's Form W-4 (filing status, dependents, other adjustments) and the IRS withholding tables for the year. Our guide to [federal withholding and Form W-4](https://www.paystubnest.com/guides/federal-income-tax-withholding-w-4) explains each step on the form. - **Social Security**, 6.2% of wages up to the annual wage base ($184,500 in 2026). - **Medicare**, 1.45% of all wages, plus an additional 0.9% once wages from you pass $200,000 in the year. Then apply **state and local withholding**. Nine states have no income tax on wages; the others publish their own tables and forms, and some add disability or paid-leave contributions or city taxes. The [state pay stub pages](https://www.paystubnest.com/states) list what each state takes out. Pre-tax deductions (next step) reduce the wages these taxes apply to, so a payroll engine applies them in the right order. ## Step 6: Apply deductions Deductions fall into two groups. **Pre-tax** deductions such as a traditional 401(k) contribution or a Section 125 health premium come out before income tax is figured (401(k) contributions still owe Social Security and Medicare). **After-tax** deductions such as a Roth 401(k), union dues, a wage garnishment or a charitable contribution come out of pay after taxes. Show each one on its own line with a clear label. The guide to [pre-tax vs after-tax deductions](https://www.paystubnest.com/guides/pre-tax-vs-after-tax-deductions) covers the common ones. ## Step 7: Show net pay and year-to-date totals Net pay is gross pay minus taxes minus deductions. Next to each line, show the **year-to-date (YTD)** amount: everything paid or withheld since January 1, including this check. YTD totals are what drive the Social Security wage-base cap, the additional Medicare tax and the employee's Form W-2, so they must carry forward correctly from one stub to the next. If you produce stubs one at a time, enter the previous YTD figures before generating the new one. Our [YTD guide](https://www.paystubnest.com/guides/year-to-date-totals-on-a-pay-stub) shows how to fix a stub when they drift. ## Using a pay stub generator Doing steps 5 and 6 by hand every pay period is where errors creep in. A pay stub generator takes the facts from steps 1 to 4, applies the current federal and state tables and prints a PDF with the YTD columns filled in. On PayStubNest the preview is free, each finished pay stub costs $1 and unlimited plans start at $9.99 a month; 18 templates let you add your logo. Whatever tool you use, the facts still come from your payroll records: hours worked, the rate you agreed, the W-4 the employee signed. A generator makes the arithmetic right; it cannot make the inputs true. ## What to keep on file Federal law does not require employers to hand out pay stubs, but it does require payroll records: the IRS says to keep employment tax records for at least four years, and the FLSA requires payroll records for three years. Most states do require a pay statement each payday, with rules on what it lists and whether it can be electronic; see [which states require pay stubs](https://www.paystubnest.com/blog/states-that-require-pay-stubs). Save a PDF of every stub with your payroll records and give the employee a copy on or before the pay date. ## Common mistakes - Using last year's tax tables. Rates, the wage base and state forms change every January. - Resetting YTD totals mid-year, or starting a new employee's YTD at zero when they already received pay from you earlier in the year. - Rounding hours or hiding overtime inside the regular rate. - Taking a pre-tax deduction out after tax (or the reverse), which changes the withholding. - Issuing a stub whose pay period or pay date does not match the actual payment. Get the seven inputs right, let current tables do the math, and the pay stub takes care of itself.