The ScalePEO Blog

Picking the Best Payroll Schedule for Your Company

Written by Jennifer Eddlemon, aPHR | Feb 7, 2019 7:21:00 PM

Before you can choose the best payroll schedule for your business you must first learn about the available options and the pros and cons of each. Listed below are the four most common payroll schedules in the United States.

 

Weekly- Payroll is done once a week, usually every Friday.

Pros: Employees appreciate the quick reward for their efforts and it boosts morale. Weekly payroll also makes it easier for employees to plan ahead and handle their personal budget. Weekly payroll is arguably the most popular schedule amongst hourly employees.

Cons: This frequency can be tough for business owners who struggle to dedicate time and resources every single week to processing payroll. Think about it—issuing weekly payroll adds up to 52 batches of paychecks a year! And for companies that have outsourced payroll this frequency can be too costly. This is because many payroll providers charge per payroll run which adds up to a lot in extra fees.

 

Biweekly- Employees are paid every two weeks, most typically every other Friday.

Pros: Employees like the consistency and can rely on the fact that their timesheets are due at the same time every pay period. Employers like how conducive the biweekly schedule is to calculating overtime since they’re always dealing with the same number of days every pay period.

Cons: Two months out of every year will have a third pay period versus the usual two.  While employees might like this “bonus” pay period, it can be a headache for payroll administrators and accountants who often use monthly—not weekly—reports, as well as it can cause confusion with benefit premiums which are typically deducted monthly.

 

Semimonthly- Payments happen twice a month on two predetermined dates like the 1st and 15th or the 15th and 30th.

Pros: Employees love knowing what to expect, and payroll administrators and accountants love this schedule since the last paycheck of the month usually corresponds with month end making their monthly reporting much cleaner.

Cons: The designated paydays may fall on different days of the week each month. For example, if the 15th falls on a Saturday then the employer needs to plan ahead accordingly, and in most cases opts to pay employees on the last weekday before the payday date.

Nearly 8-of-10 American workers, including 10% of those who make more than $100,000 a year, live paycheck-to-paycheck. 

Monthly- Payroll happens just once a month on a recurring date.

Pros: With only 12 paychecks in the year this schedule is simplest for employers in terms of frequency.

Cons: Many states require that employees are paid twice a month, or at intervals not to exceed a set amount of days, which makes a monthly pay schedule illegal. You can refer to the U.S. Department of Labor (DOL) Wage and Hour Division for state payday requirements. Additionally, most people simply can’t afford to go an entire month between paychecks making this schedule by far the least popular amongst employees.

 

How to Choose?

By now we’ve seen that there is a lot to consider when deciding on your company’s payroll schedule. While biweekly and semimonthly are typically the most popular choices you still need to take your unique situation into account. Remember, chief concerns to keep in mind as you make your decision are:

  • Employee makeup—are your employees mostly hourly or salary?
  • Your state’s payroll regulations
  • How much time, and how many resources do you have to dedicate to payroll?
  • Your budget—if outsourcing your payroll what are the processing fees and how are they calculated?
  • Accounting and benefits implications

Factoring all of these things into your decision will help you decide the best choice for your company, your employees and your bottom line.

Does payroll have you feeling overwhelmed? Don’t panic! We can help. Contact a member of the ScalePEO team today and learn how we make payroll easy.