Tips for Choosing Payroll Schedule from Payroll & Accounting Services Experts
The question often comes up in human resources and accounting departments: What’s the best payroll schedule? The answer to this question is largely dictated by state and local wage and hour laws. However, there is room for employers to decide what best suits them and their employees. Payroll plays a major role in any company.
Payroll is crucial because payroll and payroll taxes majorly affect the net income of companies. The schedule of payroll can also strongly effect any employees, as they will respond to any payroll errors and irregularities. Good employee morale typically requires payroll to be paid on time and accurately. The mission of payroll services is to ensure that all employees are paid on time with the correct withholdings and deductions so it will not cause unneeded stress and issues in the future of the company.
Common payroll frequencies include daily, weekly, bi-weekly (once every two weeks), semi-monthly (twice per month), and monthly. Less common payroll frequencies include 4-weekly (13 times per year), bi-monthly (once every two months), quarterly (once every 13 weeks), semi-annually (twice per year), and even annually (yearly).
Some large institutions such as universities and government agencies have monthly payrolls. However, employees in most small businesses will quickly let you know that monthly is out of the question. Often times a semi-monthly payroll schedule is preferred, even over a biweekly schedule since most accounting firms usually print out monthly reports to review finances. By paying employees biweekly you will have to cut 26 (Sometimes 27) checks a year instead of 24.
Hourly employees often prefer weekly or biweekly paychecks because they may run into overtime each pay period. This is not as complex for salaried employees who may work hours that fluctuate but are paid the same amount each pay period.
Weekly payroll is not a popular option for most companies because of cost. Many payroll vendors charge each time payroll is run. Meaning fees will add up, especially if you have dozens of employees on weekly schedules. Another reason weekly payroll is a rarity is because each time you run payroll it uses the time of you or your payroll administrator.
Although a weekly payroll schedule may not be the first option of the employer, many employees prefer it. Being paid weekly makes their earnings more visible and allows them to better budget for each week’s expenses. Also, deductions and contributions can be more readily seen when there is a weekly paystub to reference.
However your organization chooses to manage payroll is ultimately up to your businesses accounting standards and procedures. However, you should always keep employees needs in mind when issuing payments for hours worked. Regardless of which schedule you choose, it is important that both the company and employees are comfortable with the payroll process.
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