What is a payroll calendar?
A payroll calendaris a regular schedule that helps you pay your employees. It includes two elements: 1) the pay period, or time frame in which an employee accumulates hours for payment, and 2) the pay date, the actual date on which an employee receives payment for the previous pay period. For instance, a pay period could be from August 15 to August 25with the pay date for those ten days being on August 26.
Pros and cons of different types of payroll calendars
Before you can choose a payroll calendar, you should weigh the options available to you and which one works best for your business and employees. Here are some of the different types of payroll calendars and the pros and cons of each:
Weekly
A weekly payroll calendar is one where employers pay employees each week. This means that there will be 52 pay periods in a year. Most employers using weekly payroll calendars typically assign Fridays for paydays.
Pros:
- Good for hourly employees
- Suitable for freelance or contractual workers
- Easier for employees who have to fill out and hand in a timesheet
- Beneficial to give employees frequent pay
Cons:
- Longer to process by payroll staff
- Confusing when transitioning from one month to the next
- Less cost-effective, especially for those using paper checks or accounting services
Bi-weekly
Bi-weekly pay periods are when an employer pays employees every two weeks. This accumulates to 26 pay periods per year. For example, with this schedule, employees get paid every other Friday.
Pros:
- Cost-effective for companies who use payroll services
- Better to provide employees with larger paychecks
- Stressful on payroll staff as they have more time to focus on other duties
Cons:
- Confusing when calculating tax deductions due to overlap between the first and last pay periods of each month
Semi-monthly
A semi-monthly payroll calendar means that an employer pays their employees twice each month. This is different than bi-weekly in that these pay periods aren’t necessarily every two weeks. For example, typical semi-monthly pay periods would include August 1 and August 15 or August 15 and August 31. With this payroll calendar, employees receive 24 pay periods a year.
Pros:
- Beneficial for salaried positions
- Easier forthose in charge of payroll to oversee
- Better to work around holidays and other events like leap day
- Useful to combinewith benefit payments
Cons:
- Impractical for hourly employees
- Confusing for employees to remember
- Unhelpful to recently hired employees in need of paychecks
Monthly
A monthly payroll calendar is when employers pay employees at the beginning or end of each month. This accumulates to 12 pay periods each year.
Pros:
- Easier for payroll professionals to complete while focusing on other duties
- Doesn’t overlap months allowing for easy processing
Cons:
- Less popular with employees as they have to budget their living expenses for a month before they get paid again
How to choose a payroll calendar
Here is how to choose a payroll calendar using the following list of steps:
1. Review your state’s employment laws for payroll calendars
The United States Department of Labor sets varying requirements on the types of pay periods allowed and the number of times employers can delay payment before paying their employees.
2. Think about the types of employment you offer
This allows you to narrow down which pay periods would work best for your business. For example, if you offer only salaried positions, a semi-monthly or bi-weekly schedule might work best. In contrast, if your company employs hourly workers, they might benefit more from a weekly pay schedule.
3. Talk with HR and accounting personnel
Depending on the departments you have, your accounting and HR departments may work together to calculate and send out paychecks. Ask for their opinion to gauge what schedule would work well with their current obligations.
