When you’re running a small business, the payroll schedule might not be your first concern, but it is critical to carefully consider the different schedules available and choose the one that works best for you, your business, and your employees. After all, you won’t keep any employee for very long without reliably scheduled payroll to compensate them for their work in supporting your business.
Factors to Consider
Aside from simple timing, there are several factors that need to be considered when deciding which payroll schedule will work best for your business. For instance, every state has different laws pertaining to how payroll schedules work, how they’re taxed, and in some cases, which aren’t allowed at all. For instance, a monthly payroll schedule is not permitted in some states. You can check the Department of Labor’s website to find the payroll laws for your state, which can help you to make a sound decision on which schedule you prefer.
The weekly payroll schedule is most popular with small businesses that are mostly or completely comprised of hourly employees. Since hourly workers don’t always have a consistent expectation for each payroll, it can be a major benefit for them to have payroll run every week—this usually takes place every Friday. Unfortunately, state laws may require payroll taxes for every employee each week, which could be a problem for a small business. Make sure to check the laws for your state, so you know what you’re expected to pay.
This is a good option for businesses with a mixture of salaried and hourly employees. It can also be beneficial for small businesses that can avoid higher payroll taxes by having a bi-weekly payroll schedule rather than a weekly one. Payday for this type of schedule happens every other week, rather than every week—it often keeps payday on Friday though, same as the weekly schedule.
Semi-monthly payroll gets paid twice a month based on the dates. In most cases, these pay dates will fall on or around the 1st and 15th of each month. This is a popular option for companies that have mainly salaried employees, but it can also be used for companies with a mixture of salaried and hourly workers.
If you have a professional accountant, it is always a good idea to consult them about your options and discuss which payroll schedule will be the most beneficial for your business and employees.
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