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Isn’t it a good feeling when you receive your paycheck? I am sure nobody will disagree with this.
But the main question comes down to how should businesses choose the right payroll schedule, in other words how frequently employees need to be paid.
If you don’t pay employees often, they will find it difficult to manage their expenses but if you pay them too often, you will go on a toss with your budget concerning the processing costs involved in running payroll. We’ll answer all of your questions in this article.
Now first, we’ll take you to some of the crucial factors which influence the decision of choosing a payroll schedule,
If what you were looking for is a quick solution, we also offer payroll software that helps you in setting up your payroll process from start till end. Our integrated software provides you with a complete payroll solution and as well understands the needs of your business.
Factors to consider when choosing a payroll schedule
Laws and regulations
You may have a manual process set up for this, but some states do have rules in place as to how often employees need to be paid. For this particular reason, it is a good idea to check what local and state laws applicable at your business’s location before setting up a pay period.
Before deciding a pay frequency, get a clear view of the cost which will be involved to run payroll. If you are short on budget, you will have to cut down expenses and go for a pay period that will be run infrequently.
For example- Monthly payroll is cost-effective but won’t be a desirable option for hourly workers. This can also cause issues with talent acquisition and retention. Looking the other way round, processing payroll every week can turn out to be costly if you aren’t prepared to take up those expenses at that point in time.
Payroll system and processing
First, you will have to decide on your payroll structure, who will take care of the duties of handling everything from creating paychecks to scheduling tax payments. You can also choose to outsource responsibilities if you’ve had no knowledge about payroll or have other areas in your business to focus more on.
How many employees are on the job? How many hours are they putting on the job? Are they going to be paid on an hourly, monthly, or commission basis? How often do the employees prefer to be paid? What will be the appropriate pay period according to their job?
Keep these questions in mind while deciding a pay frequency and you are good to go.
You can also check out our payroll software for any additional help with deciding the right pay period for your business.
Types of Pay Schedules
A weekly payroll requires that you pay employees every single week, which amounts to 52 paychecks each year. This pay period is most common for hourly workers or employees that have irregular schedules.
A Biweekly payroll requires you to pay employees every other week or once every two weeks. This payroll equates to 26 paychecks each year with some years even amounting to 27. This pay period is usually used for both hourly and salaried employees.
Semi-Monthly is similar to biweekly, but just with a slight difference. You’re paying your employees twice per month on specific dates rather than handing a paycheck every other week. With this type of pay period, employers save a lot on processing costs involved with cutting checks and time spent on running payroll.
Employees are paid once per month, usually at the end of the month amounting to 12 paychecks each year. This pay period is least preferred among employees as they find it difficult to manage their personal expenses due to the infrequency of receiving paychecks.
Now that you have understood payroll schedules, it is necessary that you weigh your options according to the kinds of employees you have; the time, cost, and resources you can allocate to run your payroll. In the end, you should decide what is best for the employees and your own business.
As much as we think, employees work just for the amount of love for their job but the pay does influence how they perform on the job. Paying employees consistently, correctly and at the right time is the key.
Mohd Sohel Ather is the Senior Principal Software Engineer. He has studied computer Sciences at the Institution of Electronics and Telecommunication Engineers (IETE). An excellent software engineer, Sohel is also a passionate tech blogger. He loves to stay in the loop of the latest software technology updates.
Originally Appeared Here