How to Select the Best Payroll Schedule for Your Business

Managing best payroll schedule - paying contractors

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How to Select the Best Payroll Schedule for Your Business

Choosing the best payroll schedule is important for both you and your employees. It will impact how your employees manage your money and it will impact the way you process their pay. In this article, we cover the types of payroll schedules and the pros and cons of each.

4 Types of Payroll Schedules

To select the best payroll schedule for your business, you’ll want to understand each of them and their benefits and drawbacks. Ultimately, you have the final say as the employer, but we recommend working with your employees to determine what option works best for them as well.

Weekly Pay Schedule

Pros:

  • More frequent for employees
  • Easier to manage overtime and holiday pay for employers

Cons:

  • More frequent payroll processing

Weekly pay is common in smaller businesses and trades where there is a lot of overtime. If you’re trying to keep track of multiple weeks worth of overtime, it can get confusing. As a result, many businesses elect to pay their employees on a weekly basis usually being every Friday. 

This has some benefits to the employee as well. They’re able to receive their money sooner and if their paychecks aren’t as large as they’d like them to be, it means that they don’t have to manage their money as carefully because they’ll be paid again in seven days anyway. 

Keep in mind that processing payments weekly requires you to do payroll each week and print pay stubs. This is an additional cost to you as well as the time it will take to process the payroll. If you have more than 3-4 employees this might not be an option.

Biweekly Pay Schedule

Pros:

  • Most popular option
  • Easiest for processing payroll and managing time off

Cons:

  • More time between paychecks for employees

43 percent of businesses pay biweekly making it the most popular option. A biweekly pay schedule is common because it requires less payroll processing but it also gets the employees their money in a timely manner. It’s consistent, you don’t have to deal with excessive overtime data, and you can calculate holiday and sick pay into the biweekly payroll.

Bimonthly Pay

Pros:

  • Easy to manage time off and vacation

Cons:

  • More time between paychecks for employees
  • Less predictable processing days each month

The main difference between bimonthly pay and biweekly pay is that bimonthly always occurs on the same days of the month whereas biweekly occurs on the same day of the week. If you pay your employees biweekly, they’re likely paid every other Friday. If you pay bimonthly, it doesn’t matter what day of the week it is, they’re likely paid every 1st and 15th of the month. 

Bimonthly has a significant disadvantage of biweekly because you’ll have to work around vacations and time off if you have an accounting department. When payroll is processed every Thursday or Friday, it’s clear that certain people may not be able to take time off on those days. When the payroll days fluctuate, it’s more difficult to plan ahead.

Monthly Pay

Pros:

  • Less processing for employers
  • Better for salaried employees

Cons:

  • Challenging to manage time off
  • Long period between pay

If you choose a monthly payroll schedule, it’s most likely because our employees are salaried. Their pay doesn’t fluctuate, you don’t have to track overtime or holidays, and they’re likely paid a larger amount of money which makes it easier for them to manage.

How to Choose the Best Payroll Schedule for You

Selecting the best payroll schedule comes down to how many employees you have, what type of processing procedure you have, and how your employees feel about each plan. It’s best to talk with them and your accounting department if you have one. If you’re processing payroll yourself, chances are you only have a few employees and will benefit best from a weekly or biweekly payroll schedule. 

Regardless of which schedule you choose, providing your employees with accurate and prompt pay stubs is an important part of being an employer. PayStubs 365 can help you generate paystubs with our paystub generator today. This will save you time and help prevent time consuming and costly errors.

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