No matter the size of your business, payroll is a critical factor. After all, it’s how you ensure that your employees are properly compensated for their work. But with so many different payroll schedules out there, it can be tough to decide which one is best for your business.
When it comes to choosing a payroll schedule, there are a few things you’ll need to take into account. Below, we’ll take a look at a few of the most common payroll schedules and what you should keep in mind when choosing one for your business.
What is a Payroll Schedule?
A payroll schedule is the frequency in which you pay your employees. Payroll schedules can vary depending on the type of business you run. For example, companies with hourly employees may have a different payroll schedule than companies with salaried employees.
The most important thing to remember when choosing a payroll schedule is that you need to be consistent. This will help you with bookkeeping and compliance, and can also help your employees budget and plan for their expenses.
Before we explore the various pay schedules, let’s discuss the importance of choosing the right one for you and your team.
The Importance of Choosing the Right Payroll Schedule
There are a few reasons why choosing the right payroll schedule is so important:
It Helps You Budget
If you know how much you need to pay your employees on a regular basis, it will be easier to budget for your payroll expenses. It can also give you a more accurate overview of your finances and help you forecast for the future.
It Helps Your Employees Budget
Your employees will appreciate having a consistent payroll schedule. This way, they can budget and plan for their own expenses. If your payroll schedule is all over the place, your employees might start looking for work elsewhere that provides consistent paychecks.
It Helps You Avoid Costly Mistakes
Payroll mistakes can be very costly. For example, if you pay your employees late, you may be subject to penalties and interest charges. There are a number of laws that govern payroll, and if you’re not careful, you could find yourself in violation.
4 Types of Payroll Schedules
The most popular payroll schedules are weekly, biweekly, semimonthly, and monthly. Let’s examine each payroll schedule in greater detail so that you can see which one is the best fit for your business’s needs.
Weekly Payroll
With a weekly payroll schedule, you will process and pay your employees every week. This is a commonly used schedule.
Pros
- Employees are paid more frequently, which can help with cash flow.
- Employees’ overtime pay is reflected on their paycheck the same week.
- Employees are paid on the same day each week
Cons
- More frequent bank deposits are needed.
- Requires more frequent payroll processing, which can increase bookkeeping and payroll costs.
Biweekly Payroll
Bi-weekly pay periods are also very common. This is a schedule where employees are paid every two weeks. With bi-weekly pay periods, employees will receive a total of 26 paycheques a year.
Pros
- Employees are paid frequently, which can help with cash flow.
- It typically takes less total time to process compared to weekly payroll
Cons
- May not be well-suited for businesses with fluctuating or variable income levels.
Semimonthly Payroll
A semimonthly payroll schedule is similar to a biweekly payroll schedule, except that you will process and pay your employees twice per month, typically on the 15th and last day of the month.
Pros
- Payroll processing only occurs twice each month, saving you time.
- A predictable schedule, consistently occurring on the same days of the month.
Cons
- May not be well-suited for businesses with fluctuating or variable income levels.
Monthly Payroll
In monthly payroll schedules, employees are paid once a month on the same day. A monthly payroll schedule is often less time-consuming, making it a great fit for busy business owners who manage their own payroll needs.
Pros
- Employees know the date they will be paid and can budget accordingly.
- Payroll processing is simpler since it only happens once a month.
Cons
- A longer wait for employees between paydays, which can be challenging in the case of a financial emergency
As you can see, there are pros and cons to each type of payroll schedule. You will need to weigh the pros and cons of each schedule before deciding which one is best for your business. We’ll explore this in more detail below.
Which Payroll Schedule Is Best For Your Business?
When choosing which payroll schedule is best for your business, you will need to consider a few factors.
- How much time can you dedicate to processing payroll? How often?
- What are the regulations and laws in your area?
- What fees do you encounter each time you process payroll?
You will also need to consider the needs of your employees when choosing a payroll schedule. For example, if your employees regularly work overtime, they may prefer a more frequent payday so that they can receive their earnings sooner.
When it comes to payroll, there is no one-size-fits-all solution. The best payroll schedule for your business will depend on a number of factors, including the size of your business, your resources, and the needs of your employees.
Payroll Solutions From LedgersOnline
At LedgersOnline, we offer several payroll solutions to meet your unique needs and we are committed to seamlessly operating with your existing workflow and software. When you work with us, our payroll experts will prepare all the necessary items to ensure your regular payroll run proceeds on time and without a hitch.
Once you send us your documents or upload them to our online LedgersDocs program, our payroll experts will process the payroll – and that’s it. One of our qualified bookkeepers can help guide you through this process, determine how much sales tax you’re required to collect, and ensure you comply with your area’s regulations.
We also offer a full range of bookkeeping services, including:
- Sales Tax Reporting
- Accounts Payable
- Cash Flow Reporting
- And more!
We encourage you to get in touch with us today to learn more about how we can help you with your payroll needs.
