period is the length of time an employee works between paychecks. The most
common pay period is biweekly, with 36%
of companies choosing it. 32% of companies pay their weekly. Semimonthly
and monthly pay periods are less common.
What are the 4 most common pay periods?
If you pay your employees biweekly, you’ll pay them once
every two weeks. Because there are typically 26 pay periods in the year, you’ll
usually pay your team twice a month. Two months out of the year, however, your
staff will receive three paychecks.
If you pay your team weekly, you’ll pay them once a week.
Weekly pay periods are preferred by many workers because they’re paid more
frequently. But, they can be more expensive because you have to spend time
running payroll every week.
Weekly pay periods tend to be popular in trade businesses,
like construction or plumbing, because it’s easy to track your employees’ time
worked, even if they work vastly different hours each pay period.
If you pay your staff semimonthly, you’ll pay them twice a
month. Your accountant would probably prefer you to run payroll semimonthly
instead of biweekly because they tend to run reports on a monthly basis.
Semimonthly payroll is easier to run for salaried employees
than hourly workers. Your salaried team members will be paid the same amount
every paycheck, no matter how many hours they work.
If you pay your hourly staff semimonthly, however, track
their overtime worked very carefully to ensure you’re paying them correctly.
If you pay your employees monthly, you’ll pay them once a
month. Monthly pay periods are the least popular option with only 11.3%
of companies choosing them.
4 Things to Consider When Choosing a Pay Period
Choosing a pay frequency can be difficult because you have
to balance what’s right for your small business with what’s right for your
staff. When you’re choosing a pay period, keep these four things in mind:
1. Cost & Time
Choose a pay period that won’t cost too much to run or take
too much of your time.
If your payroll software provider lets you run unlimited
payrolls without paying extra, then the cost might not be a factor. If your
software provider charges per payroll run, however, you will probably want to
run payroll less frequently to save some money.
Don’t forget to consider how long it takes you to run
payroll because you probably don’t want to spend hours upon hours paying your
2. Your Employees
If you primarily have hourly workers, then consider running
payroll biweekly or weekly because it will be easier to track their time. If
you primarily have salaried employees, then semimonthly or monthly might be the
way to go.
3. Cash Flow
Consider your cash flow needs. Make
sure you have enough cash on hand to run payroll as frequently as you’d like.