Being an employer, you will need to take few important decisions that can have a direct or indirect impact on the employees. One such decision that you should make is to determine the frequency of making payments to your employees. There are quite a few options available for you to select in here. But it is important to take a look at the benefits and drawbacks, along with the legal requirements, so that you can pick the best one.
Adhering to the payroll laws
You need to learn more about the applicable federal and state legislation in order to know which pay period alternatives are available to you as an employer. There are no regulations governing the regularity of pay intervals at the federal level. There are several, nevertheless, that prohibit companies from arbitrarily switching pay schedules or avoiding paying workers for overtime. Researching the particular laws that apply in your state is a smart idea since state laws differ from one another.
Different pay frequency options available
Business pay periods often occur weekly, biweekly, semimonthly, or monthly. The breakdown is as follows.
- Weekly
In blue-collar sectors, weekly pay intervals are a typical option, although they can be difficult for employers. Every week, the process of gathering hours, completing paperwork, and reporting payroll can take some time. Although certain industries (like trucking) demand weekly payroll owing to competitiveness and union laws, it’s considerably simpler for enterprises to submit payroll on a little less regular basis.
- Bi-weekly
The most common choice for companies is bi-weekly payroll (every other week). Payday occurs every other Friday in a bi-weekly pay cycle. Both companies and workers can benefit from the regularity and predictability offered by this choice. It is clear and simple, even if it is not as simple to monitor for accounting reasons as monthly or semi-weekly payroll.
- Semi-monthly
Payday occurs twice a month with a semi-monthly pay period, often on the first and fifteenth of the month. Because payroll is only filed twice a month, it is simpler for companies to stay on top of things. However, semi-monthly pay periods can make payroll planning more challenging since firms must remember weekends and holidays in order to complete payroll on time. Additionally, payday can occur on any day of the week, so workers are not necessarily aware that, for example, every other Friday is payday. This method involves more preparation to guarantee that workers are paid on time even if it is simpler in terms of accounting.
- Monthly
For S Corporation owners who wish to pay themselves while keeping their taxes as basic and uncomplicated as possible, monthly pay periods are often the most suitable. It’s advisable to go with a payroll solution that gives at least two paydays each month since monthly pay periods don’t often function as well for workers (who anticipate a more regular payout).
In the end, it’s up to you to choose the pay period that best suits your requirements. Whichever option you choose, be sure you have the tools you need to submit payroll regularly, properly, and effectively.
