Back
Choosing the right payroll schedule for your small business requires understanding the laws in your state.
When you’re running a small business, the payroll schedule might not be your first concern, but it is critical to carefully consider the different schedules available and choose the one that works best for you, your business, and your employees. After all, you won’t keep any employee for very long without reliably scheduled payroll to compensate them for their work in supporting your business.
Factors to Consider
Aside from simple timing, there are several factors that need to be considered when deciding which payroll schedule will work best for your business. For instance, every state has different laws pertaining to how payroll schedules work, how they’re taxed, and in some cases, which aren’t allowed at all. For instance, a monthly payroll schedule is not permitted in some states. You can check the Department of Labor’s website to find the payroll laws for your state, which can help you to make a sound decision on which schedule you prefer.
Weekly Payroll
The weekly payroll schedule is most popular with small businesses that are mostly or completely comprised of hourly employees. Since hourly workers don’t always have a consistent expectation for each payroll, it can be a major benefit for them to have payroll run every week—this usually takes place every Friday. Unfortunately, state laws may require payroll taxes for every employee each week, which could be a problem for a small business. Make sure to check the laws for your state, so you know what you’re expected to pay.
Bi-Weekly Payroll
This is a good option for businesses with a mixture of salaried and hourly employees. It can also be beneficial for small businesses that can avoid higher payroll taxes by having a bi-weekly payroll schedule rather than a weekly one. Payday for this type of schedule happens every other week, rather than every week—it often keeps payday on Friday though, same as the weekly schedule.
Semi-Monthly Payroll
Semi-monthly payroll gets paid twice a month based on the dates. In most cases, these pay dates will fall on or around the 1st and 15th of each month. This is a popular option for companies that have mainly salaried employees, but it can also be used for companies with a mixture of salaried and hourly workers.
If you have a professional accountant, it is always a good idea to consult them about your options and discuss which payroll schedule will be the most beneficial for your business and employees.
Trust the Professionals at the Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for consultations and strive for open communication with our clients.
Are you interested in business advising, tax preparation, bookkeeping and accounting, payroll services, training + support for QuickBooks, or retirement planning? We have the necessary expertise and years of proven results to help.
We gladly serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of tax time, contact us online or give us a call at (410) 573-9991 for a free consultation. Follow us on Facebook, Twitter, YouTube, and LinkedIn for more tax tips.