A pay period is the recurring length of time over which employee time is recorded and paid. It's a crucial aspect of payroll management as it determines how often employees receive their paychecks.
Types of pay periods
Weekly: Employees are paid once a week, resulting in 52 paychecks per year. This is common in industries like retail and hospitality.
Bi-weekly: Employees are paid every two weeks, totaling 26 paychecks a year. This is a popular option as it balances frequent payments with administrative efficiency.
Semi-monthly: Employees are paid twice a month, usually on the 15th and the last day of the month, leading to 24 paychecks a year. This schedule is often used in office and administrative settings.
Monthly: Employees are paid once a month, resulting in 12 paychecks a year. This is less common but can be used in certain salaried positions.
How pay periods affect payroll
Consistency: Regular pay periods help ensure that employees receive their wages consistently and on time.
Overtime Calculation: The frequency of pay periods can impact the calculation of overtime, especially in weekly or bi-weekly schedules.
Administrative Load: More frequent pay periods can increase the administrative work for payroll processing, while less frequent periods can simplify it.
Employee Satisfaction: Employees often prefer more frequent paychecks, as it helps them manage their personal finances more effectively.
Choosing the right pay period
When deciding on a pay period, consider the following:
Industry Norms: Aligning with standard practices in your industry can simplify payroll management and meet employee expectations.
Cash Flow: Ensure that your business has the necessary cash flow to meet payroll obligations on the chosen schedule.
Regulatory Compliance: Check local and federal regulations as they may dictate specific pay period requirements.
How to set up your pay periods
Navigate to the Setup tab
Go to Payroll > Pay Periods
Click +Add
4. Complete the required fields*
Choose a date to start the pay period
Choose the length of the pay period
Choose the scheduled process date
5. Additional Overrides
Block Tax Filling
Block All Deductions
Block Direct Deposit
Use Supplemental Tax Rate
Auto Run Payroll
Block Employee Notifications
6. Scheduled earnings
Click Add
Select from the dropdown the earnings codes to schedule for each payroll
7. Scheduled Deductions
Click Add
Select from the dropdown the deductions codes to schedule for each payroll
8. Click Save