How often should you run payroll?

Whether you run your own payroll or use payroll services, one of the first things you have to decide is when and how often to pay your employees. This is a tougher decision than you might think at first. Fortunately, payroll companies automate the process so that you can set it and forget it.

So, the question becomes how do you determine your payday schedule? There are many factors that influence this decision, including state and federal laws regarding payday frequencies. In this guide, we explore all the factors and provide the information you need to make the best decision for your employees and company.

Also, you aren’t locked into a frequency once you make a decision. If you find that the original schedule you set doesn’t work for you, you can always make a change. However, whatever change you make must apply long term. Federal and state governments are very sensitive to random payroll changes to avoid overtime or other expenses.

Pay Periods Defined

Although pay periods may not coincide exactly with payday frequency, they must represent the same length of time. In other words, if you pay your employees once a week, you can build in a lag time to give your accounting team or payroll providers time to process all the information needed to supply accurate paychecks.

For example:

Your weekly pay period for May begins May 1st and ends May 7th. However, employees get their checks for that period on May 14th.
The next payroll period runs from May 8th to 14th, and employees would see the money via direct deposits or physical checks on May 21st.

This is just one example of how you might run your payroll periods on a weekly basis.

Different Types of Pay Periods

Each type of payroll period has its pros and cons. You can brush up on your state laws to ensure that you adhere to the required standards. Common payroll frequencies include the following:

Weekly: Many employees like to receive their checks on Fridays and employers oblige by setting up weekly pay periods. Under this scenario, employees receive 52 paychecks in a calendar year.
Biweekly: Some payroll schedules run for two weeks to minimize work required by back-office employees or to accommodate the schedule of their payroll services provider. Under this schedule, employees receive 26 paychecks a year.
Semimonthly: Workers get paid two times a month, typically on the 1st and 15th calendar day. Under this system, employees receive two dozen paychecks per year.
Monthly: Many states require employers to pay workers more than once a month. However, some states do allow monthly pay periods resulting in 12 paychecks per year.

Federal Pay Frequency Laws

Federal laws don’t set specific payroll periods, leaving it up to the states to decide those rules. However, federal laws specify that employers must keep a consistent pay frequency. In other words, you can’t decide to pay workers once a month, then suddenly switch it to once a week, then biweekly. Changes to payroll periods must come with sufficient notification to allow employees to plan ahead for the change.

In order to change your payroll frequency, the following conditions must apply to your situation:

There is a legitimate business reason for doing so.
It’s a permanent change and not sporadic.
You aren’t doing it to avoid paying minimum wage or overtime.
It doesn’t cause a long delay in payment. s

State Pay Frequency Laws

With a few exceptions, such as Alabama, most states have payroll frequency laws to protect employees. These laws include or exclude weekly, biweekly, semimonthly, and monthly payroll periods. Some states allow multiple payroll frequencies, but individual companies must keep to a regular schedule once they determine what their payroll periods will be.

For example, Ohio has a minimum payroll frequency of semimonthly payrolls. However, employers can pay weekly or biweekly as well. On the other hand, employers in Ohio don’t have the option to adopt a monthly pay period since it would violate the state’s minimum payroll frequency laws.

Here are the various pay periods allowed by each state. Some have flexible rules and others have more than one approved schedule. You can refer to the US Department of Labor State Payday Requirements for more details.

State	Weekly	Biweekly	Semimonthly	Monthly	Flexible
Alabama					x
Alaska			x	x
Arizona			x
Arkansas			x
California	x	x	x	x
Colorado				x
Connecticut	x
Delaware				x
D.C.			x
Florida
Georgia			x
Hawaii			x	x
Idaho				x
Illinois			x	x
Indiana		x	x
Iowa	x	x	x	x
Kansas				x
Kentucky			x
Louisiana		x	x
Maine			x
Maryland		x	x
Massachusetts	x	x
Michigan	x	x	x	x
Minnesota			x	x
Mississippi		x	x
Missouri			x
Montana					x
Nebraska					x
Nevada			x	x
New Hampshire	x	x	x	x
New Jersey			x	x
New Mexico			x	x
New York	x		x
North Carolina					x
North Dakota				x
Ohio			x
Oklahoma			x
Oregon				x
Pennsylvania					x
Rhode Island	x	x	x
South Carolina					x
South Dakota				x
Tennessee			x
Texas			x	x
Utah			x	x
Vermont	x	x	x
Virginia		x	x	x
Washington				x
West Virginia			x
Wisconsin				x
Wyoming			x

★★★★★

$8.00

Add to compare

Salaried Vs. Hourly Employees

If you have mostly salaried employees, you have a very predictable payroll. However, if you have part-time, full-time and flextime employees that work on an hourly basis, it can make your payroll costs harder to forecast. The type of employees that you have will, therefore, impact the payroll frequency that you choose.

For example, companies with a majority of hourly employees typically run payroll more frequently, often weekly or biweekly. However, if you have mostly salaried employees, you may pay them semimonthly since they have a predictable salary and can budget more effectively.

The best payroll software gives you the flexibility to choose the pay frequency that works best for your company. Business online payroll services give you 24-hour access to important details and records regarding your payroll. This makes it easier to analyze trends and set your pay period frequency accordingly.

Payroll Schedules for Businesses of All Sizes

The size of your business may also affect how often you write checks. For example, there’s a lot more overhead involved in paying 1,000 employees or 10,000 versus paying fewer than 100 workers.

If your company is currently growing, you may want to consider decreasing your payroll frequency to cut back on paperwork and make the administrative side of payroll management a bit easier.

Of course, the best payroll service online allows you to set the schedule that meets the needs of your employees and provides accurate analytics for business leaders.

How Much Does Payroll Cost?
According to a recent article on business.com, there are a number of criteria that impact the cost of your payroll processing. Some payroll providers charge a flat fee per payroll or adopt a per-employee fee that helps you accurately budget your payroll expenses.

Let’s say you’re on a semimonthly schedule. Base fees range between $29 to $150. So, you could expect to pay between $58 and $300 per month for payroll services for your small business. Businesses with more employees can expect higher fees based on tiered pricing schedules.

Using a per-employee charge, your small business payroll could cost you between $2 to $12 per employee per pay cycle. As you can see, the frequency of your pay period affects your payroll processing costs in a very direct way. The method of payment also has an impact on your costs. Direct deposit is the cheapest and most efficient way to get money into your workers’ bank accounts.

If you do have to hand out physical checks, adopting automatic signatures and using a check delivery service can help you streamline the process and may even save you money.