Choosing the right payroll schedule for your team and your business is a daunting task. Paying your employees too often can drain your bottom line, but paying them too infrequently can cause undue hardship on their personal budgets.
In this article, the workforce management experts at Sling give you 4 tips to help you decide which payroll schedule is right for you, your team, and your business.
The Four Most Common Types Of Payroll Schedule
A weekly payroll schedule means that you pay your employees every week for work done the previous week.
Businesses using a weekly payroll schedule usually distribute checks on Friday for the last full week worked (Monday through Sunday).
For example, if employee A worked 40 hours during the pay period November 4, 2019, through November 10, 2019, you would process their hours worked during the following week and give them a check on Friday, November 15, 2019.
The term “biweekly” is a bit confusing at first because it has two different definitions.
A biweekly payroll could mean distributing paychecks every two weeks. But it can also mean distributing paychecks twice a week.
When it comes to your payroll schedule, however, biweekly always means every two weeks. The amount of work and cost that would go into distributing paychecks twice a week would be unrealistic for most businesses.
When it comes to a biweekly pay period, most businesses choose every other Friday (e.g., September 13, 2019, and September 27, 2019).
Since each month doesn’t always have four full weeks, there will be two months every year with a third pay period. With a biweekly payroll schedule, you’ll distribute 26 paychecks over the course of one year.
A semi-monthly payroll schedule means you pay your employees twice per month. Unlike biweekly, the semi-monthly payroll period has nothing to do with the number of weeks in a month.
You simply choose two days — roughly equally spaced (e.g., the 15th and the 30th) — process the timesheets prior to those days, and pass out checks at that time.
With a semi-monthly payroll schedule, you’ll distribute 24 paychecks (2 paychecks x 12 months) over the course of one year.
In a monthly payroll schedule, you pay your employees for the work they did over the past 30 days.
Because of processing time (typically a week), you may pay your employees for time worked over three weeks of the current month (e.g., November) and one week of the previous month (e.g., October).
You could also structure it so that you pay your employees at the end of the first week in the following month.
In that case, your employees would work November 1 through November 30, you would process the payroll during the first week in December, and paychecks would be sent out on Friday, December 6.
With a monthly payroll schedule, you’ll distribute 12 paychecks over the course of one year.
4 Tips For Choosing The Best Payroll Schedule
1) Research Your State Laws
All 50 states have a minimum payroll schedule beyond which it is illegal to pay your employees.
You can always pay your employees more frequently than the law allows, but never less frequently.
Indiana, for example, stipulates that businesses have to pay employees at least semi-monthly (twice a month). Indiana businesses can choose to pay employees biweekly (every two weeks) or weekly, but they can never implement a monthly payroll schedule.
Be sure to check your own state’s payday requirements before you decide which schedule to use.
2) Consider Flexibility
Whether you process your payroll in-house or outsource it to a third-party company, you need to take into account flexibility before choosing a payroll schedule.
An in-house payroll department may adapt easier to more frequent pay periods, but it may take them more time to get the numbers in order.
On the other hand, a third-party processor may be faster, but they won’t do anything less than a semi-monthly payroll schedule.
3) Factor In The Needs Of Your Business
If your business doesn’t have the time or the capability to complete all of that paperwork on a weekly payroll schedule, you might be better served adopting a semi-monthly schedule instead.
4) Don’t Forget The Needs Of Your Team
It’s also vital to keep the needs of your team members in mind when choosing the best payroll schedule for your business.
Distributing paychecks once a month may be good for your business, but it may not be good for your employees. On the other end of the spectrum, distributing paychecks every week may be good for your employees, but it may not be good for your business.
Find a payroll schedule that works for both your business and your employees (perhaps biweekly or semi-monthly).
Get Control Of Your Payroll With Scheduling Software
One of the best ways to get control of your entire payroll system is by using a scheduling tool like Sling. The Sling app is designed specifically for streamlining your scheduling process (which affects payroll), so all of its tools are dedicated to that task.
- Powerful and intuitive scheduling
- Comprehensive time-tracking (with geofencing)
- Dynamic reporting
- Time-saving payroll processing
- Customizable communication (e.g., location-specific or team-wide)
- Effective budgeting
- Productive labor cost optimization
- Helpful overtime control
- And much more…
Sling’s user-friendly interface makes it easy to see how many hours each employee will work each week — so they don’t stray into overtime territory — and gives you notifications of overlapping shifts and double-bookings.
Sling even provides features that help you distribute your schedule efficiently, keep it up to date, find substitutes, and communicate with your employees.
Add to that the onboard artificial intelligence and you’ve got an extremely beneficial and flexible set of tools that will help you get control of your team, improve engagement, and keep your payroll under control.
For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.