As a freelancer, you are responsible for all the duties of your profession. But, you are not provided with benefits. When you freelance by the hour, it’s important to keep track of your time spent on various projects. You can use an online time tracker or download an app to help you see how much time is spent on each project.
Keep track of all this information so that you have it for tax purposes and invoices at the end of the year. If you have questions about whether or not you should receive a pay stub, read on to learn more about what they are and their importance.
1) Pay stubs help keep financial records tidier for everyone
If you have a client pay you a set hourly rate for a specific project, then a pay stub is something you can generate to help organize and track financial transactions. You’ll still deal in invoices, but pay stubs are a good place to keep track of hours you spend on specific projects.
Pay stubs are one of the easiest forms of documentation you can create for freelance work. They usually take about five minutes to create using an online paystub generator.
2) Pay stubs give you a place to categorize hours worked and help you reconcile your hourly compensation to your weekly cash flow
When you get paid for a project, you’ll have to come up with some way to track and reconcile the time you spent on a particular project with the money you received. You can think of an invoice as an itemized list of what you’re being paid for, but a pay stub can be easier to track and reconcile your hours spent on different projects.
Simply put, an important benefit of pay stubs is that they make it easy to reconcile the hours you worked and your hourly compensation.
3) It’s easier to establish proof of income and apply for credit loans
One problem freelancers have is showing proof of income when they want to apply for credit loans. In many cases, companies won’t consider your PayPal balance alone as proof of income. Pay stubs are one of the easiest ways to prove that you are being regularly paid and that your income level is reliable and consistent.
When you generate a pay stub, you can also include details such as the date, amount, time worked, and more. This will help you demonstrate that you’ve worked for a client and that the payment you received was for work that you did.
4) It’s an easy way to understand how you are going to bill clients, if you invoice a project separately from hourly rates for the same client
There are several different ways freelancers can bill for their work. Hourly rates are the most common, but many also choose to bill “per item” or “per project”.
If you generate pay stubs for a particular project or one of your clients’ projects, you can always break your hourly rate down into an itemized bill for clients who need more details, and you can easily split an hourly rate into an itemized bill for each client.
5) If you are paid on a percentage basis, it’s often more intuitive to receive a pay stub with the hours worked designated for that percentage
If you receive a client or project’s payment in a flat fee or per hour amount, it can be a challenge to calculate how much you worked. On the other hand, when you’re receiving payment for a percentage of the work that you’ve done, it’s much more intuitive to know how many hours you’ve worked and be able to divide that number by a particular percentage.
For example, if you work a certain amount of hours per week on a project, you’ll likely receive a bill based on an hourly rate, which makes it a lot easier to calculate how much you worked on a specific project. It’s a good idea to send clients a pay stub with the hours worked designated to a specific percentage.
6) Pay stubs help establish how much you are earning for each client, and therefore, why it makes sense for you to set up direct deposit
By utilizing your hourly compensation, you can know exactly how much you are being paid per hour for each client, and that can allow you to charge clients the appropriate hourly rates for their projects. If your client pays you per hour, you’ll know exactly how much they are paying you to perform each task. This is an important way to ensure you’re billing your clients appropriately.