5 Steps to Choosing a Payroll Schedule
As you consider establishing a payroll process or making changes to the one you already have, one of the first things you should determine is your payroll schedule—in other words, how frequently you will pay your employees.
By following these 5 simple steps, you can make the right choice for you, your employees, and your business.
Step 1: Get Your Financial Brain in Full Gear
Start with the basic fact that there are 52 weeks in each year. Just as the speed of light and the force of gravity are considered constants, there are always the same number of weeks in every calendar year. The number 52 is your baseline for determining the number of checks you’ll issue in any given year.
Step 2: Know Who You Are and What You Need
Consider your business—how it operates and how it’s structured:
How many employees you have.
If they’re hourly, salaried, or a mix of both.
Calculating overtime and ensuring minimum wage compliance for some or all of your employees.
Your accounting/bookkeeping system.
Most operate on a monthly reporting cycle.
Benefit payments within your pay cycles.
If you work with a third party for benefits, check with them to see if they are able to adjust for different scheduling options.
Ensuring you have a system in place to:
Have the funds on hand.
Make the correct calculations.
Issue the checks and/or make direct deposits.
Comply with employee withholding and employer tax regulations.
Meet key payment and reporting deadlines.
Correlate your payroll will your business taxes.
Step 3: Know Your Core 4
The most common pay schedules are weekly, bi-weekly, semi-monthly, and monthly. Out of these, the top two are bi-weekly and semi-monthly.
Step 5: Use Payroll Software
If all of the steps above sound like a lot of work, it’s because they are. This is the exact reason why payroll software was created—because you have better things to do than spend hours calculating and administering payroll.
With the rapid growth in cloud-based tools, it’s becoming even easier and more affordable for small businesses and startups to get a handle on their financial processes.
For example, with a Software as a Service (SaaS) payroll company that specifically serves small businesses and startups, all you have to do is get set up then press go. Enter your information, pick a schedule, then rinse and repeat.
Employee withholdings and employer taxes are done.
Direct deposits are made.
Employees can easily access their paystubs and end-of-year documents.
You can easily meet federal, state, and local tax and compliance deadlines.
It’s a win-win for everyone.
Are all payroll applications essentially the same? Nope. What really sets them apart is ease of use and the level of customer support. Before you choose, make sure you kick the tires by requesting a demonstration and talking to the customer service team.
Are you currently struggling with payroll schedules or payroll in general? If you have a story from the front lines, please share it in the comments below.