Should you pay employees weekly, biweekly or bimonthly? There are pros and cons to different pay schedules for both the company and its employees. Opting for a weekly pay schedule depends on several factors including a company’s accounting structure, your HR and administrative capabilities, and the needs, job requirements, and benefits structures of your workers. Learn more about which setup makes the best sense for your business.
HOW WEEKLY PAY WORKS
Many employees feel like the more frequently they get paid, the better. This is especially true of hourly workers. Monthly or even biweekly payroll can put a financial strain on employees who need more access to cash-on-hand and depend on the consistency and frequency of their paychecks.
Weekly paychecks precisely reflect an employee’s work week down to the minute, including any overtime accrued, which they can be paid for promptly. Since hourly employees’ schedules can vary week to week, a weekly pay schedule could ensure that workers are paid accurately, on schedule, and the employer can track labor in real time more frequently.
Weekly payroll also works for the employer in terms of how you deal with your employees and vendors. Weekly checks for both ensure that balances are paid as the expenses come in, as opposed to less frequent options that require more budgeting and forethought. Hiring new employees could be simpler, as the employee sees they get paid more frequently.
However, the amount of time and work it takes to process payroll on a weekly basis can add up. This type of pay schedule means accounting for things like wage garnishment, time off, and taxes is done on a weekly basis. Checks and bank fees might also add up. Accounting at end of the month can get confusing if the month end falls in the middle of a week.
OTHER PAYROLL SCHEDULE OPTIONS
In addition to weekly payroll, the three other most common schedules include biweekly, semimonthly, and monthly. While weekly pay often works in the best interest of hourly employees, these other methods may favor a mixture of workers and the organizations that employ them.
According to the Bureau of Labor Statistics, biweekly pay is the most common payroll method for companies that employ a mixture of hourly and salaried employees. Workers can depend on the consistency of paychecks, but less frequent and for a longer work period than the weekly schedule. However, there is a downside for new workers who may have to wait up to three weeks to receive their first paycheck.
For employers who use biweekly, bimonthly, or other options besides weekly pay schedules, the benefits include not having to factor the management of weekly payroll into their workload.
HOW THE LAW AFFECTS YOUR PAY SCHEDULE
There aren’t any specific federal laws that mandate how often you pay your employees, but some states do have specific requirements. In Maine, for instance, employers must pay their workers at regular intervals that do not exceed sixteen days, which takes a monthly pay schedule off the table. New Hampshire employers are required to obtain permission to pay employees on a monthly or semimonthly basis, as weekly or biweekly is required by law.
And the types of workers you employ, such as variable hour employees, may trigger different pay schedule requirements.
HOW PAYROLL FREQUENCY AFFECTS YOUR TAXES
It’s your responsibility as an employer to pay and track payroll taxes, which include your share of Social Security, Medicare, as well as federal and state unemployment taxes. Your liability is based on a percentage of each employee’s wages, NOT how frequently they are paid. So, while the pay schedule you choose will not affect how much you pay in taxes, the amounts you withhold and then pay from each employee’s paycheck will be different.
CALL IN THE EXPERTS
If you are still unsure if a weekly pay schedule would work best for your company or would just prefer to outsource the job to a team that has the experience and expertise to guide you, Payroll Vault has you covered. Our team specializes in assisting small businesses track and manage payroll in a way that suits your needs and makes the most sense. To learn more about how Payroll Vault can help your company thrive, request a quote today from Payroll Vault - Oklahoma City, Oklahoma.