Selecting the right schedule for payroll may seem to be a decision that’s simple and straightforward; however, there are important factors that need to be taken into consideration with this decision. This includes the work environment, labor and employment regulations, benefits, and payroll costs. The first step in selecting the correct schedule of business for payroll is analyzing the work environment and the kind of employees an employer retains.
A business identifies the best payroll schedule by what’s most beneficial not just for the business, but for the employees as well. Failing to take workers into account, the business will see its turnover rate skyrocket. With that being said, a business has four main options for payroll schedules: monthly, semimonthly, biweekly, and weekly.
As soon as the business has considered what is best for its employees, the next thing to check is the requirements for payment of salaries that are set by local regulations. Laws can vary depending on the jurisdiction a business falls under. After checking applicable regulations, it is then time to discuss with the payroll specialists or accounting department of the business to determine the schedule that is best. There are often benefits expenses, as well as processing expenses which can have an effect on the schedule that’s perfect for the enterprise.
Generally, a weekly pay period is what’s preferred by businesses with hourly employees mainly. Semimonthly and biweekly pay periods prove to be ideal for SMEs and startups, depending on the employees’ makeup within the organization as well as charges for payroll processing. As for the monthly payment schedule, it is what’s recommended for workers who are freelancing as many salaried workers find it hard to budget if they are only paid once a month.
Weekly pay periods are great for hourly-paid workers; however, you have to understand that they are more costly for businesses. This is because payroll companies charge customers every single time they process payroll. Hourly workers prefer a weekly pay schedule, although this is not worth it, especially with a startup or small business.
If the staff is composed mainly of hourly workers, the payment schedule that is set weekly would be best in helping them. It is also likely to boost employee morale. A business is advised to choose the ideal service provider for payroll processing as the process is done more frequently.
With a biweekly schedule for payroll, employees get paid twice every single month. This will be the same day of each week they are paid. The day is usually on a Monday and companies lock in the first and third Monday of every month. This pay period would be great for a business that has a combination of hourly and salaried employees.
Biweekly is an excellent compromise for an hourly worker. It is also great for a salaried worker, which is often what companies have a staff member. For a good mix of the two kinds of employees, this would be the best option.
The biweekly plan offers workers a solid understanding of when they will receive their wages each month. It is important, however, to talk with payroll specialists or accountants in order to make sure the schedule is ideal for the business. You may find there are benefits-related costs as well as other expenditures that affect the ideal schedule.
A semimonthly schedule for payroll is similar to a biweekly pay schedule. However, instead of having paydays that are on consistent days each month e.g. first Monday and the third Monday of each month, the semimonthly pay period is timed to certain dates. The paydays are typically n the 15th and 30th or the 1st and 15th of every month. If the dates fall on weekends, the payroll specialists may decide whether employees are to receive their pay on Monday which is before the weekend, or the Monday afterward.
The semimonthly plan can be the perfect option. However, because of dates, the payments may be delayed or future-based. This may present issues from an accounting and management perspective.
Just like the biweekly period for payroll, regulations and healthcare costs should be taken into consideration prior to making a decision based on the pay schedule.
The monthly period for salaries, on the other hand, is not ideal for a small business. It is a great option for freelance or contract-based workers. It’s a more heavily regulated option in comparison to the others. The accounting team or payroll outsourcing specialists can double-check whether it is possible for the business to choose the monthly pay schedule.
You may also read: Why Payroll Outsourcing is Great for Your Business
Regardless of what you choose as the payment schedule for your company, it is best to seek the help of professionals when processing company payroll. A dedicated payroll processing team can help ensure timely payments and full compliance with regulations. Call us today if you want to know more about the outsourced processing of paroll in the UAE.