Paying hourly workers can be a headache, especially if your business doesn’t have some plans in place to help organize the process. It’s important to track your employees’ hours accurately, collect and confirm the info, and import it into your payroll provider. It’s also important to decide exactly when you will pay your employees so that you can plan out cash flow and your budget. That is where payroll schedules come in.
What is a payroll schedule?
A payroll schedule is a combination of a pay date and a pay period. The pay period is the time period that the employee worked. The pay date is the day they will receive their wages. There are a few different payroll schedules that businesses use. Some are common for hourly employees, and others are much less common.
The most common payroll schedules
The most common types of payroll schedules in the U.S. are weekly, biweekly, semi-monthly, and monthly. Each payroll schedule has pros and cons, and the best payroll schedule for small businesses should be chosen according to you and your employees’ needs and requirements:
Weekly payroll
A weekly payroll schedule means that your employees will get paid every week on the same day of the week, often Friday. This is a schedule that is typically only used for hourly employees, as their working hours can change week to week.
Some employers choose a weekly pay schedule because it is desirable to their employees to be paid more frequently. With a weekly pay schedule employees will get paid 52 times in a year.
Biweekly payroll
A biweekly pay schedule means that your employees will get paid every other week on the same day, often Friday. This schedule is popular for hourly employees. Often employers will select a biweekly payroll schedule with a week in arrears.
This means they pay their employees for a given pay period one week after the pay period has ended. That gives them time to collect and confirm hours worked and process payroll accordingly. With biweekly pay periods, employees will get paid 26 times in a year.
Semi-monthly payroll
A semi-monthly pay schedule means that your employees will get paid twice a month, often on the 15th and last day of the month. Semi-monthly payroll schedules are popular for salaried employees, less so for hourly employees.
That is because hourly employees are often scheduled by the week, and their schedules can fluctuate, so their pay would not be the same each period. That could make it more difficult to gather hours and process payroll correctly.
Salaried workers get paid the same amount every time, so that is not a concern for them. With semi-monthly pay periods, employees will get paid 24 times in a year.
Monthly payroll
Payroll on a monthly basis is not very common, as it is not legal in some states, given that it could mean a long delay between the time your employees perform work and the day they get paid for it. It is often only done for high-level, salaried executives.
This is a good reminder that you should check on any payroll schedule laws and state payday requirements to make sure you choose appropriate payroll periods for your employees, both hourly and salaried.
Payroll in arrears
When it comes to hourly workers, many employers need some time between the pay period and the pay date to gather hours and check that they are correct. Especially for tipped workers, it may not be possible to run payroll until at least a few days after the pay period has ended. This gives employees time to confirm their hours and report their tips.
Having a delay between the pay period and the pay date is often called payroll in arrears. It refers to the fact that the employee is working for a set period and agrees to be paid after that period ends. Hourly workers are typically paid in arrears. Salaried workers typically are not paid in arrears, because the amount they get paid does not change each pay period.
Choose the right payroll schedule for your business
When it comes to payroll schedules for hourly workers, the most common choices are weekly or biweekly. Choosing the right option for your business comes down to your preference and your employees’ preference. Some employees may be used to a weekly schedule and desire that when they look for a job. Others may not care.
Some payroll providers may charge you for each payroll run, making weekly payroll much less desirable. Other payroll services may charge you a flat monthly fee, so the number of pay periods and pay frequency don’t matter. Consider what matters to you as a business owner, your business itself, and your employees as you decide what payroll schedule is right for you.
Need help with your payroll schedule? Get started with Homebase Payroll today to learn more about how easy running payroll can be each pay period.
