When to pay your staff might sound like an easy thing to choose, but there are many important factors to keep in mind.
There are two sides to employee payments, the actual workers and the business.
You want to pay your staff often enough to keep them happy, but not so often it causes bookkeeping nightmares and extra work.
There are four commonly used options when it comes to paying staff;
weekly, biweekly, semi-monthly, and monthly
Now, biweekly and semi-monthly may sound the same to a layman, but in terms of payroll, they are different. Biweekly payments are made on the same day every two weeks. This is often a Friday, whereas semi-monthly are paid on the same date each month, usually the 15th.
Biweekly payments happen 26 times a year, whereas semi-monthly ones take place two times less, at 24 times every year, and this is where even a layman can see the difference.
As each payroll event makes work for a bookkeeper, you may want to choose the lesser option, if you want to pay staff twice a month – on the other hand, knowing what day this is to take place may make life easier for everyone. This is a question for each business individually, depending on what works best for them.
Weekly,(52 times a year), and monthly,(12 times a year), need no explanations as they are self-explanatory.
There is also another important consideration to look at carefully, and that is the law. This varies from place to place, and in America from state to state, and this can limit your choice of payment schedule. For example in one American state biweekly is not allowed, but semi-monthly is. In another, monthly payments are outlawed.
Before finalising a payroll timetable, check the law in whatever country and state your business is in. From there you can then choose the time that best suits how your business is structured.
If your workers are paid by the hour, weekly or bi-weekly payments could be a good choice as it is easier to calculate overtime. If your employees are on a salary, semi-monthly or monthly might suit better as it reduces time and cost of extra pay rolling for the business.
Your cash flow is an important consideration too, so remember to see how much money you have coming in regularly and when, when panning what time and how often to pay staff.
ProBookKeeper helps organise payroll payments in a quick and easy transaction, keeping careful records of all incoming and outgoing money, so why not give it a try today to help take your business to the next level.