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Learn about the pros and cons of four payroll schedules and which one is right for your business.
The most common payroll schedules in the U.S. are weekly, biweekly, semimonthly, and monthly pay periods. While it may not seem like such a big decision, the choice is crucial to your business, as it could mean the difference between 12 or 52 pay periods. Continue reading to learn more about the payroll schedules and how to choose the right one for your business!
Weekly: 52 Weeks
Weekly payroll has many benefits for employees, as everyone would love to get paid each week, but unfortunately, they are the hardest schedule for employers. The frequent pay schedule means that employers must spend time each week calculating wages, deducting income taxes, and withholding wages for health insurance premiums, and so on. If you have the time and resources to stick to a weekly schedule, it would be a great benefit to employees, but if not, there are many other options.
Biweekly: 26/27 Weeks
Biweekly is one of the most common payroll schedules, as it makes employees happy and is easier for employers to manage. The only issue is if you look at your business’s budget on a month-by-month basis, as biweekly schedules don’t break down perfectly into monthly brackets. For example, if the first day of the year is a Monday, there would be three pay periods in January but only two in February. However, biweekly is still an excellent choice for most businesses, as it ensures that employees get paid on a predictable schedule, while employers can save more time and money than they would with weekly pay periods.
Semimonthly: 24 Weeks
Semimonthly is similar to a biweekly schedule, but it is slightly different; no matter the day of the week, employees will be paid on the first and 15th of every month. This is even more reliable than biweekly payments, as your staff will know the exact date they are getting paid every month. The only issue is when the first or 15th (or 15th and 30th if you choose) falls on a Sunday, as employees won’t get paid until Monday or Tuesday, depending on how quickly the bank takes to process deposits. Also, semimonthly payroll works better with salaried employees than with hourly employees.
Monthly: 12 Weeks
Lastly, there is the option for a monthly payroll with only 12 pay periods a year. As you may guess, this option is the most affordable for employers, as they only have to pay the processing fee for direct deposit and check writing once a month. However, it is often a burden on employees, especially those who are hourly workers and don’t always get paid the same amount every month. It works better for salaried employees but still leaves a significant gap in between paydays that can be difficult for those who need the money more frequently.
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