Choose the Right Payroll Schedule for Your Small Business
One of the most important decisions to make when setting up a small business is determining the payroll schedule. Many companies will simply choose a schedule that they are familiar with rather than looking at all of the options and their pros and cons. However, there are many ways that a payroll schedule could be structured. The one that will be best suited for your needs will depend on your company’s needs, as well as the types of employees that work for you. Let’s get a closer look at the various types of payment schedules that are available.
Types of Payment Schedules
One of the first things to note is that there may be legal requirements in your area determining the minimum payment period. For example, monthly payments might not be allowed as a payment system in the state where your business is located. Always make sure to check the legality of the payment period you choose.
With this schedule, there would be a single payment each month on a designated date. There are pros and cons to this type of payment system. The employer benefits since there is only one pay period, which will reduce the cost of processing the payments when compared with other options. However, when you use the right payroll software, it can help to reduce the amount of time and expense of payroll regardless of the schedule you choose.
However, this type of system is not desired by most employees because it can make it so much more difficult to manage money. Additionally, if they start in the middle of the month, it could take them five to six weeks to get their first paycheck. Most employees will not want to wait that long before getting paid.
A semi-monthly payment system would have two pay periods each month. These would be on designated dates each month, such as the 1st and the 15th, for example. This system can work well for employees that are on a salary since they aren’t collecting any overtime. It’s a simple and popular system for many companies. However, small businesses that have hourly employees will find that the biweekly schedule might work better for their needs and their employees.
Biweekly payment systems also provide payment twice a month. However, these are typically paid on a specific day rather than a date. The most common example is being paid every other Friday. The schedule is popular with hourly employees, and it is commonly used by HR and payroll departments. The system works well for those who are getting overtime and who might have far more hours one week than on the next.
Using traditional payroll systems can make it difficult to use biweekly payments. This problem can be alleviated by using high-quality payroll software for small businesses.
With this system, you would pay the employees once a week, typically on a Friday. Most employees like to be paid each week, and it can work well for hourly employees, as well as those who are working freelance for a company. It allows the employees to have more freedom and flexibility with their money. The cost can be higher with this type of schedule since the payroll is done each week. Again, good payroll software can help to speed up the process and greatly reduce the cost of cutting checks.
What’s Right for Your Business?
All small and medium-sized businesses are different, and there is no “best” schedule that will work well for every company. You need to consider the types of employees you have—hourly or salaried—and determine what will work best for your business and your employees.
Regardless of the option you ultimately choose, An efficient payroll software for small business can help to make payroll faster, easier and error free Additionally, consider software that can provide additional features, such as automatic salary changes, ACA compliance, payroll tax management, and employee documentation. Good software can help to make even the most difficult or repetitive tasks simpler, allowing your HR department to handle all of the other aspects of their job.