How Often Should You Pay Your Employees

Accounting Tips: How Often Should You Pay Your Employees?

When you are setting up your payroll system, it is important to consider the pay period structure and how often checks are distributed. There are a variety of ways that you can plan for paycheck distribution, and this schedule will help to set the expectation so that employees know when they will be paid.

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Payroll Frequency Options

Most companies will pay their employees on a bi-weekly basis or a semi-monthly basis. Bi-weekly means that the paychecks are distributed every two weeks, such as every-other Friday. Semi-monthly means that the paychecks come on two specific days each month, such as on the 15th and the 30th.

In some situations, there are companies that will pay more or less frequently. Some companies find it best to distribute earnings once a month, while other groups like to pay on a weekly basis. There isn’t necessarily a right or wrong answer, especially since there are pros and cons to all of these options.

What is the Best Frequency?

The frequency of your payroll system depends on the individual needs of your employees. The best thing that you can do is talk with an experienced bookkeeper or accounting team to get their professional recommendations.

Even though it is tempting to reduce the frequency of payroll processing by only cutting checks once a month, you need to consider that this type of system probably won’t work for some of your employees who need access to the money right away. Frequent paydays are beneficial to quickly reward the employees for their work, keeping positive reinforcement in place in order to increase job satisfaction.

Setting Up Your Payroll System

One of the most important aspects about setting up your payroll system is to ensure that you are clear with expectations, so that employees know when they will be receiving their paycheck. By sharing details about payday, each employee will be able to plan their personal budget accordingly.

Also, it is essential that you have an effective computer system in place to track the hours and process the paychecks. Most small business owners don’t have the time or experience needed to handle these tasks correctly, so you should consider the benefits of hiring a small business bookkeeper to help.

If you need assistance with payroll processing or any other type of bookkeeping or accounting services, then we invite you to contact us right away. Here at Easier Accounting, our goal is to help you simplify and optimize the financial systems within your company. Contact us today for more information: (888) 620-0770

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