When you’re self-employed, managing your paperwork is a daunting task. Unlike traditional employees, you do not usually receive a paystub listing your earnings and tax deductions.
Does this mean that there is no such thing as paystub for independent contractors? What if you need to show proof of wages for a new car or credit card?
In this blog, we shall discuss the topic of independent contractor pay stubs. Let’s begin!
Employee or Independent Contractor Pay Stub?
Let’s first define the difference between an Employee and an Independent Contractor:
- Work at a fixed schedule of assigned hours.
- Have taxes deducted from your paycheck.
- Receive training from the company.
- Have work assigned to you by the manager.
- Are given the required tools and equipment you need for the job.
- Work only for one employer.
- Receive benefits like holiday pay and sick leave.
On the other hand, an Independent Contractor:
- Make their own schedule.
- They are responsible for their taxes.
- Supply their own tools and equipment.
- Can accept or refuse work offers.
- Use their own knowledge to do the job.
- Can work for more than one client.
- Does not receive any benefit beyond a paycheck.
If your job falls in the middle between these descriptions, you are not alone. It is estimated that U.S. employers wrongly allocate millions of workers as independent contractors.
1099 or W-2?
If you still need to figure it out, take a closer look at your paperwork. At the end of the year, which tax form do you receive for your work?
A W-2 form is the form given to employees by the company they work for. It lists annual pay and includes details about the tax withholdings holiday pay.
A 1099-MISC form, is the perfect form for independent contractors. It showcases only the total amount of income you received during the year without anything hidden.
Does a 1099-MISC form count as an Independent Contractor Paystub? The answer is no. But you can use this information from your 1099-MISC form to create paystub.
Generating A PayStub For Self-Employed
Because you’re self-employed, you do not receive a typical paycheck. That is okay. You can use a free online tool to create your own paystubs. Follow these steps:
- Choose your state of residence.
- Select whether the pay stub is for yourself or an employee.
- Fill in your personal information.
- Fill in your company details.
- Fill in the additional fields.
- Add any deductions.
Once you submit this information and choose your template, you are good to go! An easy online platform like Online Paystub allows you to download and print your Independent Contractor pay stubs.
Navigating through the world of income, taxes, and pay stubs is a challenging task. Now that you understand the difference between an independent contractor and an employee, you will be better prepared for next year’s tax season.