4 Considerations When Choosing a Pay Period for Your Small Business

Binder with payroll information

A pay period is a specific and recurring length of time where you track your team’s hours worked and pay them for that time. Because it will determine how many paychecks your employees receive each year and affect their income tax withholdings, you’ll need to choose one before running payroll.  

There are four common pay periods: 

  1. Weekly – Your team will be paid 52 times each year, and it’s typically easy to track regular and overtime hours worked because your pay period will usually line up with your workweek. Although your workers might like getting paid every week, it can be time-consuming and expensive for you to run payroll that often. 
  2. Bi-weekly – You’ll pay your team once every other week, so your staff will usually receive 26 paychecks a year.  According to the U.S. Bureau of Labor Statistics, this is the most common pay frequency, which may be because it’s just as easy to track time worked as it is on a weekly basis, but you’ll likely spend less time running payroll. 
  3. Semi-monthly – Your team will receive two checks a month, often on the first and 16th or the 15th and last day of the month. This results in 24 paychecks during the year. Although similar to bi-weekly, semi-monthly pay periods don’t always line up with the workweek, making it more challenging to calculate time worked.  
  4. Monthly – You’ll pay your team just 12 times a year on the same day each month. Although this might drastically cut down on the amount of time you spend running payroll, your staff will likely be unhappy because of potential financial strain.  
Pay Period Payday Frequency Paychecks per Year
Weekly Once a week 52 
Bi-weekly Once every other week 26 
Semi-monthly Twice a month 24 
Monthly Once a month 12 

Choosing the right schedule requires you to try to balance what’s right for your small business, what your workers want, and what the law requires. To help you choose the best pay period for your small business, keep the following four things in mind. 

1. What the law says 

According to federal law, you can pay your team using whatever schedule you want, but you must pay them at regular intervals. Some states, though, have strict regulations about how often you can pay your team. For example, in Connecticut, you have to pay your team every week. In New Jersey, you cannot pay your staff monthly. Other states, like Alabama, don’t have any restrictions on pay frequency.  

Learn more about your state’s payroll laws. 

2. How you pay your team 

If you primarily hire hourly employees, it might be best to choose a weekly or bi-weekly frequency to track their time worked more easily, especially if your staff works vastly different amounts each week. With salaried staff members, you may have more leeway because they’ll be paid the same amount each pay period, regardless of how many hours they worked. 

3. How much time it takes to run 

Running payroll takes time away from other activities, so think about how long it will take to write paychecks. If running payroll every other week takes only a few minutes longer each time than running payroll every week, you may be able to save yourself a lot of time in the long run by choosing a bi-weekly schedule. 

4. How much it costs 

Some payroll providers may charge you each time you run payroll. If you pay your team weekly, those costs could add up quickly. If your provider offers unlimited payroll runs, you will still need to consider your cash flow to ensure you have enough money on hand to run payroll as often as you’d like. 

Run payroll with Workful 

With Workful, you can run payroll as often as you like without paying extra. You’ll also be able to 

  • pay your team via direct deposit 
  • include multiple pay rates 
  • track your staff’s time worked 
  • reimburse expenses and mileage 
  • monitor paid time off 

Since everything you need is in one place, running payroll only takes minutes. Try Workful today and get back to work faster. 

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