Payroll and Taxes

How to Choose a Payroll Schedule for Your Small Business

Hannah Rau
February 1, 2024
min read

Deciding how often to pay your employees is a crucial part of managing payroll. Finding the right frequency is a balance between providing financial stability for your employees and managing processing costs for your business. 

While it might seem like a simple decision, you should consider several factors when choosing the ideal payroll schedule.

Let’s dive deeper into this topic and find the perfect payroll schedule for you and your employees!

What’s a Payroll Schedule?

A payroll schedule is a predetermined plan that outlines when and how often employees will receive their wages. It is a structured framework for payroll processing, indicating the regular intervals at which employees are paid. 

The schedule typically specifies the frequency of payments, such as weekly, bi-weekly, semi-monthly, or monthly, and helps establish consistency in compensation distribution. 

The chosen payroll schedule is an essential component of a company's payroll policies, influencing both financial planning for employees and the operational aspects of payroll administration.

Steps for Choosing a Payroll Schedule for Your Business

To help you discover the appropriate payroll schedule, we've simplified the process into simple steps:

Step 1: Find possible options

There are four commonly used pay schedules:

  • Weekly payroll

Weekly payroll involves paying employees every seven days, resulting in 52 payrolls per year. This frequency is well-suited for businesses employing hourly workers following a standard 40-hour workweek. Employees appreciate the regularity of receiving their paychecks, while the system simplifies the calculation of weekly overtime.

Weekly payroll schedule
  • Biweekly payroll

Biweekly payroll is every two weeks, totaling 26 or 27 payrolls annually. This schedule provides consistency for hourly employees with 80-hour pay periods. 

Biweekly payroll schedule
  • Semimonthly payroll

Semimonthly payroll includes paying employees twice a month on specific dates, resulting in 24 payrolls each year. Pay periods generally cover 87 hours. This schedule offers consistency in pay dates and pay periods, making monthly reports easier for the accounting department. It is particularly well-suited for salaried employees without overtime, aligning perfectly with monthly costs like healthcare deductions.

Semimonthly payroll schedule
  • Monthly payroll

Monthly payroll involves paying employees once a month, typically at month-end, resulting in 12 payrolls annually. This schedule has the lowest processing costs among all payroll schedules, making it ideal for certain industries. 

Monthly payroll schedule

However, employees often find this schedule less favorable for managing their finances due to less frequent paydays. It's crucial to consider state laws, as some states may have specific requirements regarding payroll schedules.

Step 2: Consider business needs

When choosing a payroll schedule for your business, several key business needs should be considered. These include:

  1. Employee preferences: 

Take into account the preferences of your employees. Some may prefer to be paid more frequently, while others may prefer a less frequent but larger paycheck.

  1. Business cash flow:

Consider your business's cash flow. Choose a payroll schedule that aligns with your business's revenue patterns and ensures you have enough funds to meet payroll obligations.

  1. Employee types: 

The nature of your workforce matters. For businesses with predominantly hourly employees, a more frequent payroll schedule may be beneficial, while salaried employees may prefer less frequent but predictable pay.

  1. Administrative ease: 

Evaluate the administrative workload associated with different payroll schedules. Some schedules may be more complex to manage than others, and it's essential to choose one that aligns with your administrative capacity.

  1. Legal compliance: 

Ensure your chosen payroll schedule complies with local labor laws and regulations. Some jurisdictions have specific requirements regarding the frequency of employee payments.

  1. Budgeting and financial planning: 

Consider how different payroll schedules impact budgeting and financial planning. A consistent and predictable payroll schedule can aid both employees and employers in financial planning.

  1. Business type and industry norms:

Assess whether your business type and industry norms favor a particular payroll schedule. Certain industries or types of businesses may have established norms for payroll frequency.

  1. Employee retention and satisfaction: 

The chosen payroll schedule can impact employee satisfaction and retention. Understanding the needs and preferences of your workforce can contribute to a positive working environment.

  1. Payroll system compatibility: 

Ensure that your chosen payroll schedule aligns with the capabilities of your payroll processing system. Some systems may have limitations or additional costs associated with certain frequencies.

Step 3: Select the pay schedule and implement it

Now that you've considered your business needs and identified the most suitable payroll schedule, it's time to implement it. 

For an efficient payroll process, consider using, a payroll solution with numerous benefits:

  • Payroll calculations covering tax deductions and employer taxes in all 50 states.
  • Easily shareable pay stubs with employees via email.
  • Contractor payment documents (contractor pay stubs).
  • Automatic generation and pre-filling of W2 and 1099 tax forms.
  • Document storage for essential record-keeping.
  • Mobile-friendly interface for convenient payroll management from anywhere.

Sign up for a 14-day free trial now to get all its benefits and schedule the selected payroll schedule.

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