Business owners must make hundreds of decisions when first starting up. One of the first decisions they must make when beginning to hire employees is determining the company’s payment schedule. The most common frequencies in the United States are monthly, semi-monthly, biweekly, and weekly. Each of these has both advantages and disadvantages, so it is important to do your research before deciding which frequency to go with.
This payroll frequency is mostly used by large institutions, and it is one of the least popular out there because employees usually don’t want to go 30 days without getting a paycheck. Each state has laws about how often employees should be paid, so in many areas, monthly payroll is not even an option. It makes sense for bigger institutions, like universities and government agencies, to go with this option because it causes the least amount of impact to benefits and accounting and it is much more simple and economical to process.
Paying your employees twice a month (usually the 15th and 30th) costs less than both weekly and bi-weekly processing. If you have both salary and hourly employees, this option would work for you. With semi-monthly paychecks you will have 24 pay periods per year. The biggest challenge with this option is that employees need to be able to adapt to flexible pay schedules. Depending on the date they get paid, there will be times when that date falls on a weekend or holiday, so employees will have to adapt to either getting paid either before or after their typical paydate.
With this option, you will be paying your employees every other week-usually is every other Friday. This means that you will be paying your employees 26 or 27 times a year, 80 hours per paycheck. Because each month doesn’t always have four full weeks, choosing this schedule means that every year there will be two months with a bonus pay period. For accountants, this can be an inconvenience since they usually run their reports on a monthly basis.
If your staff is mostly hourly, then this is the option that will be the best fit for you. This option is preferred by most employees because they get a paycheck every week, equaling to 52 pay periods a year. The downside of going with this option is that many payroll providers charge for each payroll run, so doing it weekly can start to add up, depending on the size of your staff.
When choosing a payroll schedule for your business, it really comes down to the number of hourly and salaried employees you have. The lower the wage you’re paying and the more hourly employees you have, the more frequent you should pay them. Regardless of the option you choose, you should consider choosing a payroll management software that helps ease the paperwork burden it can place on your HR staff. Dominion’s payroll makes payroll easy and simple, and our cloud based software allows you to process payroll from anywhere with an internet connection. If you’re interested in learning more about how Dominion can help you with payroll, request a quote below!