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The guidelines below are partially based on the Stealth playtest done by Paizo and the Paizo community as well as my own decisions on how Stealth can be handled. The system allows characters and monsters to use Stealth in ways that make sense in the real world. The trade off is that additional Stealth and Perception checks are needed, but reasonable circumstance modifiers should help balance out the system. LINK

STEALTH (Dex; Armor Check Penalty)
You are skilled at avoiding detection, allowing you to slip past foes or strike from an unseen position. This skill covers hiding and moving silently.

Initiating Stealth: Your Stealth check is opposed by the Perception check of anyone who might notice you. Usually a Stealth check is made at the start of an action when you have partial cover, improved cover, total cover, concealment, or total concealment.

Stealth may be initiated with movement during a move action or as a swift action when staying immobile. Note that a 5-foot step is not considered a move action and may not be used to initiate stealth.

If a character takes a fee action while under Stealth, it is very likely that they will need to make a new stealth role to continue it’s effects. Note that some free actions are so slight that they will grant a circumstance adjustment to the Stealth check (usually +2 to +5).

If circumstances for an observer changes for the better, they may be granted a new Perception check. For instance, a soldier climbs a guard tower and gains a better vantage point. The Stealthed character is much more likely to be seen so a new Perception check is allowed. However, if an observer’s circumstance changes for the worse, a new Perception check is not given.

It is normally impossible to initiate Stealth while taking an immediate action, a full-round action, or when making an attack unless you are subject to an affect such as greater invisibility or you are sniping.

When you make your Stealth check, foes that do not succeed at the opposed Perception check treat you as hidden until the start of your next action or until the end of your turn if you do not end your turn with cover or concealment. You are not hidden from foes that are observing you (creatures that you didn’t have cover or concealment from) or that succeed at the opposed check.

Hidden Condition: You are difficult to detect but not invisible. A hidden creature gains a +2 bonus on attack rolls against sighted opponents, and ignores its opponents’ Dexterity bonus to AC (if any). You do not have line of sight to a creature or object that is hidden from you.

Invisible Condition: Invisible creatures are visually undetectable. An invisible creature or object gains the benefits of the hidden condition. An invisible object or creature gains total concealment.

Attacking while Hidden: Usually, making an attack against a foe ends the hidden condition. For purposes of Stealth, an attack includes any spell targeting a foe or whose area or effect includes a foe. Actions directed at an unattended object do not end Stealth and causing harm indirectly is not an attack. though some actions may require a new Stealth check.

Note that loosing the hidden condition does not automatically mean your opponent is aware of your exact location. If you are using a ranged weapon from cover, your opponent may only have general idea where you are after you make your attack. In most cases, this knowledge is sufficient to allow the opponent to nullify your ability to regain the hidden condition until you reposition to a new location and attempt another Stealth check.

Searching for Hidden Foes as a Free Action: A creature can choose to make a Perception check as a free action each round in order to locate the general location of a hidden foe (DC equal to opponents’ Stealth checks). A successful check lets a the character see or hear some evidence of an unseen foe “over there somewhere.”

Searching for Hidden Foes as a Move Action: Instead of using a free action, A creature may choose to make a Perception check as a move action. The DC of the Perception check is the hidden foe’s last Stealth check. A successful check means that the creature has detected the hidden foe. This is also the case if a creature makes a Perception check when entering an area where it could possibly notice a hidden foe.

Sniping: If you are already hidden to a target and are at least 10 feet away from that target, as a standard action you can make one ranged attack against that target and immediately make an opposed Stealth check to stay hidden. You take a –20 penalty on your Stealth check when attempting to snipe.

Creating a Diversion to Hide: As a standard action, you can use Bluff to create an opportunity to Stealth. If you do not have cover or concealment, as a swift action, you can attempt a Bluff check opposed by the Sense Motive of opponents that can see you. If you are successful, you earn the opportunity to initiate Stealth from the distracted foe (at -10 to the check) until the end of your next action, you make an attack (as defined in the Attacking while Hidden section), or the end of your turn, whichever happens first.

Ranger’s Camouflage: This ability does not work if the opponent is observing the Ranger attempting Stealth. In other words, the Ranger may gain hidden status while benefiting from concealment or cover and then use favored terrain as if it were concealment to sneak forward. But once the ranger’s hidden condition is removed the ranger must re-acquire cover or concealment to reattempt a Stealth check.

Hide in Plain Sight: When the conditions are met for this ability, the character acts as if they have concealment for the purposes of being able to use Stealth.

Sneak Attacks while Hidden: The moment the Sneak Attack is made, the hidden condition is lost. If a character is able to make more than one attack each round, only the first attack is considered to be a sneak attack.

Stealth Modifiers for Moving Silently:
Move at half speed and use Stealth: +0
Move at three-quarter speed and use Stealth: -5
Move at normal speed and use Stealth: -10
Remaining in Stealth while immobile: +5
Stealth while Invisible and immobile: +40
Stealth while Invisible and moving: +20

Stealth Modifiers for Moving Silently or Hiding:
Size Modifier: Fine +16
Size Modifier: Diminutive +12
Size Modifier: Tiny +8
Size Modifier: Small +4
Size Modifier: Medium +0
Size Modifier: Large –4
Size Modifier: Huge –8
Size Modifier: Gargantuan –12
Size Modifier: Colossal –16


EXAMPLE:
Rogue (Stealth +5, Perception +2)
Servant (Stealth +0, Perception +1)
A Rogue is searching a large storeroom when he hears the sound of a key being used in the lock. The only light in the room is a single lantern hanging near the door. The room is filled with a large number of chests and boxes, so there are many places to hide behind and plenty of shadows to blend into (dim light or darkness).

The door opens just as the Rogue ducks into the shadows behind one of the crates.
The servant is allowed a Perception check to notice the Rogue as he attempts to Stealth, but since the door squeaks (-2) and blocks line of sight to the Rogue’s attempt (-5).
Rogue Stealth check: d20=12, 12+5=17
Servant Perception check: d20=15, 15+1-2-5=9
The Rogue goes unnoticed.

The servant begins rummaging through a chest near the door. The Rogue is completely out of the servant’s line of sight and makes no attempt to move (no new roll needed). After a few minutes, the servant closes the chest and begins to move further into the storeroom to check other chests, unaware he is moving towards the Rogue’s hiding place (DC 10). The sound of the servant’s footsteps are deadened by the boxes the Rogue is using for a hiding place (DC +10).
Servant DC: DC 10+10=20
Rogue Perception check: d20=7, 7+2=9
The Rogue is unaware that the servant is moving towards his hiding place.

The servant stops in front of a chest that is only a few feet from the Rogue. This eliminates the cover the Rogue has, but the Rogue is still cloaked in Shadows. He remains immobile (+5), but since the base DC to detect the Rogue is now easier, a new Stealth check is needed.
Rogue Stealth check: d20=7, 7+5+5=17
Servant Perception check: d20=9, 9+1=10
The servant still does not notice the Rogue.

With a satisfied sigh, the servant removes a small cloth bundle from the chest. He unties the strings and reaches into the small pouch of cloth. He pulls an old silver medallion, taking a moment to watch it slowly spin on it’s old leather cord. The Rogue, eyes locked on the man, realizes that medallion the man now holds is the very piece he was looking to steal…and if he were to allow the man walk to walk out of the room, his job was going to become much more difficult. The Rogue waits patiently for the servant to turn away.

Wrapping the medallion in the cloth, the servant closes the chest and turned to walk towards the door. As soon as the servant passes the Rogue’s hiding place, the Rogue quietly steps out, drawing a sap from his belt as he emerges (-0). The servant, attention on moving towards the exit, is considered to be distracted (-5).
Rogue Stealth check: d20=13, 13+5-0=18
Servant Perception check: d20=19, 19+1-5=15

As the servant reaches for the door, the stealthy Rogue is able to come from behind and attempt a Stealth attack in hopes on knocking the servant out.