How Often Should You Run Payroll? Pros & Cons of Each Schedule

Choosing how often to run payroll affects more than when employees receive their paychecks. Your payroll schedule can influence employee satisfaction, cash flow, payroll administration, overtime calculations, benefit deductions, and the amount of time your team spends processing payroll.

Most businesses use one of four common payroll schedules: weekly, biweekly, semimonthly, or monthly. Each has advantages and disadvantages, and the right choice depends on your workforce, industry, payroll processes, and applicable wage payment requirements. Understanding how each payroll frequency works can help you choose a schedule that works for both your employees and your business.

What Is Payroll Frequency?

Payroll frequency refers to how often employees are paid. The payroll frequency you choose determines the length of each pay period and the number of payroll runs your business processes throughout the year. The most common schedules are:

• Weekly payroll: typically 52 paychecks per year
• Biweekly payroll: typically 26 paychecks per year
• Semimonthly payroll: 24 paychecks per year
• Monthly payroll: 12 paychecks per year

A pay period and a pay date are not necessarily the same thing. The pay period is the span of time covered by a paycheck, while the pay date is the day the employee actually receives payment. For example, a biweekly pay period might cover two full weeks of work, with employees receiving their paycheck several days after the period ends.

Calendar differences can occasionally result in an extra payroll. Some years may include 53 weekly pay periods or 27 biweekly pay periods, depending on how the scheduled payday falls.

Why Your Payroll Schedule Matters

Payroll frequency can affect several areas of your business.

Employee Cash Flow and Satisfaction

Employees often plan household expenses around their paycheck schedule. More frequent payroll can provide employees with quicker access to the money they have earned and make it easier to manage recurring expenses.

Payroll frequency can also influence employee expectations. Weekly or biweekly pay is common in many industries with hourly workers, while semimonthly schedules are common among salaried office employees. A predictable schedule helps employees know when they will be paid and plan accordingly.

Payroll Administration

Every payroll run requires work. Depending on your payroll process, someone may need to collect timecards, confirm employee hours, review overtime, calculate deductions, account for paid time off, check benefits, process payroll taxes, and verify payroll before payments are issued.

A company running weekly payroll may process payroll approximately 52 times per year. A monthly schedule requires only 12 payroll runs. Modern payroll software can automate much of this work, but payroll frequency still affects how often your team needs to review and approve payroll.

Business Cash Flow

Payroll is typically one of a company’s largest recurring expenses. Your payroll schedule determines when those expenses leave your bank account. Businesses must make sure sufficient cash is available for employee wages, payroll taxes, benefit deductions, and other payroll-related costs.

Certain schedules can require additional planning. Biweekly payroll, for example, usually results in two months each year with three employee paychecks instead of two. Planning for those months can prevent unexpected pressure on cash flow.

Compliance Requirements

Businesses also need to consider wage payment laws when establishing a payroll schedule. Pay frequency requirements can vary depending on the state, employee classification, and type of work performed. Some jurisdictions establish minimum requirements for how frequently certain employees must be paid.

Employers with employees working in multiple states may also need to account for different requirements. Before establishing or changing a payroll frequency, businesses should confirm that the schedule complies with the rules that apply to their employees.

Weekly Payroll

Weekly payroll means employees are generally paid once every seven days. A weekly schedule normally results in 52 payroll runs during the year. It is particularly common among businesses with hourly employees, fluctuating schedules, regular overtime, or seasonal workers.

Pros of Weekly Payroll

One of the biggest advantages of weekly payroll is that employees receive their earnings quickly. Workers do not have to wait two weeks or longer between paychecks, which can make managing everyday expenses easier.

Weekly payroll can also work well for businesses with hourly employees. When the payroll period lines up with the employer’s workweek, tracking regular hours and overtime can be relatively straightforward. A weekly schedule may also be attractive when recruiting employees in industries where frequent pay is common.

Cons of Weekly Payroll

The main disadvantage is the number of payroll runs. Processing payroll 52 times per year creates more administrative work than any of the other common schedules.

Each additional payroll may require managers to approve hours, correct timekeeping errors, update employee information, verify deductions, and review payroll reports. Businesses using payroll providers that charge based on each payroll run may also face higher processing costs. The short turnaround between one payroll and the next can also give managers less time to identify and correct timecard problems.

Who Is Weekly Payroll Best For?

Weekly payroll is commonly used by businesses with large hourly workforces or frequently changing schedules. Examples may include:

• Construction companies
• Hospitality businesses
• Restaurants
• Staffing companies
• Seasonal businesses
• Service companies with substantial hourly labor
• Professional services firms
• Administrative offices
• Financial services companies
• Corporate environments
• Businesses with limited hourly or overtime-based work

The best fit ultimately depends on how the company’s workforce operates.

Biweekly Payroll

Biweekly payroll means employees are paid every two weeks, usually on the same day of the week. For example, employees might receive a paycheck every other Friday. A standard year normally includes 26 biweekly pay periods.

Pros of Biweekly Payroll

Biweekly payroll offers a middle ground between weekly and semimonthly payroll. Employees receive checks relatively frequently, while the employer only needs to process payroll about half as often as a weekly schedule.

Biweekly payroll is also useful for hourly employees because each pay period generally contains two complete seven-day workweeks. This can make tracking overtime easier when the payroll schedule aligns with the company’s established workweek.

Employees also benefit from a predictable payday. If payday is every other Friday, employees generally know exactly which day they will receive their paycheck.

Cons of Biweekly Payroll

The biggest budgeting challenge is the occasional three-paycheck month. Employees normally receive two paychecks during most months, but there are typically two months during the year when they receive three. Businesses need to plan ahead for the additional payroll expense during those months.

Benefits can also require additional consideration. If health insurance or other deductions are based on a monthly amount, the employer needs a consistent method for distributing those deductions across 26 annual paychecks.

Who Is Biweekly Payroll Best For?

Biweekly payroll can work well for businesses with a combination of hourly and salaried employees. It provides frequent employee payments without requiring the employer to run payroll every week. For that reason, it is a common option for companies looking to balance employee convenience with manageable payroll administration.

Semimonthly Payroll

Semimonthly payroll means employees are paid twice each month. A common schedule might pay employees on the 15th and last day of the month, although businesses can establish other dates. Unlike biweekly payroll, semimonthly payroll always results in 24 paychecks per year.

Pros of Semimonthly Payroll

One advantage is consistency from month to month. Employers know there will be exactly two regular payrolls each month. This can make monthly budgeting and accounting more predictable. Semimonthly payroll can also align well with monthly benefit premiums and other recurring expenses.

For salaried employees, payroll calculations are generally straightforward because their annual salary can be divided evenly across 24 pay periods. Employers also process two fewer regular payrolls each year compared with a standard biweekly schedule.

Cons of Semimonthly Payroll

Semimonthly payroll can be more complicated when employees are paid hourly. Pay periods do not always contain the same number of workdays. One period might contain 10 working days while another contains 11 or 12.

The payroll period also may not align cleanly with the company’s seven-day workweek, which can create additional steps when calculating overtime. Pay dates can create another complication. If the 15th or final day of the month falls on a weekend or bank holiday, the business may need to adjust the actual payment date.

Who Is Semimonthly Payroll Best For?

Semimonthly payroll is often well suited for businesses with primarily salaried employees. Companies with significant hourly labor can still use semimonthly payroll, but they should make sure their payroll system can accurately handle timekeeping and overtime calculations.

Monthly Payroll

Monthly payroll means employees receive one paycheck each month. The schedule results in only 12 payroll runs per year. It offers the lowest processing frequency of the four major payroll schedules, but it may not be appropriate or permitted for every workforce.

Pros of Monthly Payroll

The primary advantage is administrative simplicity. Instead of processing payroll weekly or every other week, the employer only needs to complete one regular payroll run each month. That can reduce the amount of time spent preparing and reviewing payroll. Monthly payroll can also make cash-flow planning straightforward because payroll occurs at a predictable point each month.

Cons of Monthly Payroll

Waiting an entire month between paychecks can be difficult for employees. Rent, utilities, groceries, transportation, and other expenses occur throughout the month. Employees receiving one paycheck may need to budget carefully to make those funds last until the next payroll.

Monthly payroll may also be restricted for certain employees depending on applicable wage payment laws. Errors can have a greater impact as well. A mistake on a weekly paycheck affects a relatively short pay period, while an error on a monthly paycheck may involve a much larger portion of an employee’s earnings.

Who Is Monthly Payroll Best For?

Monthly payroll may be appropriate for certain salaried employees, executives, or small organizations where the schedule is permitted. Employers should review applicable wage payment requirements before adopting a monthly schedule.

Is Biweekly or Semimonthly Payroll Better?

Biweekly and semimonthly payroll sound similar, but they work differently. With biweekly payroll, employees receive a paycheck every two weeks. That normally produces 26 paychecks each year. With semimonthly payroll, employees receive two paychecks every month for a total of 24.

Biweekly payroll is often easier for businesses with hourly employees because the payroll period can contain two complete seven-day workweeks. That makes it easier to match hours and overtime with the employer’s established workweek.

Semimonthly payroll can be convenient for salaried employees because annual salary, monthly benefits, and other deductions can be divided consistently across 24 payrolls.

The better choice depends heavily on who you employ. A company with many hourly employees and regular overtime may prefer biweekly payroll. A professional services company with mostly salaried employees may find semimonthly payroll more convenient.

How to Choose the Right Payroll Schedule for Your Business

Several factors should be considered before selecting a payroll frequency.

Consider Your Workforce

Start with how your employees are paid. A workforce made up primarily of hourly employees may have different payroll needs than one made up of salaried professionals. Consider:

• The number of hourly employees
• The number of salaried employees
• How frequently employees work overtime
• Whether schedules change regularly
• Whether you employ seasonal or temporary workers
• Direct deposit timing
• Benefit deductions
• Payroll tax deposits
• Garnishments
• Retirement contributions
• Timekeeping periods
• Overtime calculations
• Payroll reporting
• Wage calculations
• Payroll tax calculations
• Direct deposit
• Employee deductions
• Benefits administration
• Time and attendance data
• Paid time off
• Payroll reporting
• Payroll calendars
• Employee recordkeeping

Understanding these characteristics can help narrow down the most practical payroll schedule.

Review State Payroll Laws

Payroll frequency cannot be selected based on convenience alone. Businesses should verify the wage payment requirements that apply wherever employees perform work. Rules can vary based on factors such as employee classification and location. Companies operating across state lines should make sure their payroll practices account for employees working in different jurisdictions.

Evaluate Your Cash Flow

Consider how frequently your business can comfortably fund payroll. Running payroll more frequently does not necessarily increase annual wages, but it changes the timing of when cash leaves the business. Businesses using biweekly payroll should pay particular attention to three-paycheck months. A payroll calendar can help management forecast these expenses in advance.

Consider Payroll Processing Costs

Payroll frequency can also affect processing expenses. If your payroll provider charges per payroll run, weekly payroll may cost more to administer than semimonthly or monthly payroll. Internal labor matters as well. Managers and payroll administrators may spend time reviewing payroll every time it is processed. Automation can reduce that workload, but processing frequency remains an important consideration.

Think About Employee Preferences

Payroll is ultimately about paying employees accurately and on time. Consider what schedule employees are accustomed to within your industry. Workers who traditionally receive weekly pay may view a move to monthly payroll negatively. In other environments, employees may already expect a biweekly or semimonthly schedule. A predictable payroll schedule can contribute to a better employee experience.

Consider Your Accounting and Benefits Schedule

Payroll does not operate independently from the rest of the business. Health insurance premiums, retirement contributions, garnishments, paid time off, accounting periods, and other expenses may all interact with payroll. Choosing a schedule that works well with your existing accounting and benefits processes can simplify administration.

Can You Change Your Payroll Frequency?

Businesses can change payroll schedules, but the transition should be carefully planned. Before making a change, review applicable wage payment requirements and determine how the new schedule will affect employees.

For example, moving from weekly to biweekly payroll changes when employees receive money they have already earned. The transition should be structured carefully so employees are not unintentionally subjected to an excessive gap between paychecks.

Employers should also review:

Employees should receive clear advance communication explaining when the current schedule will end, when the new schedule will begin, and what their new pay dates will be.

How Payroll Software Makes Different Pay Schedules Easier to Manage

Running payroll involves much more than calculating gross wages. Payroll software can automate many of the repetitive processes associated with weekly, biweekly, semimonthly, or monthly payroll. Depending on the system, businesses may be able to automate or simplify:

Integrated payroll and timekeeping systems can be particularly useful for businesses with hourly employees. Instead of manually moving employee hours from one system into another, time records can flow directly into payroll for review and approval. Automation reduces repetitive data entry while giving employers more visibility into their payroll expenses.

Choosing a Payroll Schedule With Horizon Payroll Solutions

The right payroll frequency should fit the way your business operates. A construction company with hourly crews may have very different payroll needs from a professional services firm with salaried employees. Workforce size, overtime, benefits, state requirements, cash flow, and internal payroll processes can all influence which schedule makes the most sense.

Horizon Payroll Solutions helps businesses manage payroll without having to handle every calculation, deadline, and administrative task manually. From payroll processing and tax administration to reporting, timekeeping, and HR tools, Horizon can help your business build a payroll process that fits your workforce. If you are setting up payroll for the first time, considering a new pay frequency, or looking for a better way to manage your existing payroll process, contact Horizon Payroll Solutions to discuss your options.

This content is for general information purposes and does not constitute tax or legal advice, nor does it address federal, state, or local law.  Employers should consult qualified legal and tax counsel regarding their specific obligations.