Payroll Cycles (#54)

In this podcast episode, we talk about optimizing the use of payroll cycles, and point out a legal issue that can interfere with one of the more common payroll cycles. Key points are:

  • A payroll cycle is the length of time between payrolls, such as weekly, once every two weeks, semi-monthly, and monthly.

  • Less total annual accounting effort is required to prepare the longer payroll cycles, since there are fewer of them.

  • Every two weeks or semi-monthly are generally the most tolerable for employees.

  • A two-week payroll cycle gives employees two paychecks per month, plus two additional checks over the course of a year.

  • The semi-monthly payroll can cause a problem, because (depending on the dates) it may sometimes require employees to wait too many days from when a pay period ends to when paychecks are issued. Therefore, a two-week cycle is the best combination of processing efficiency and compliance with the law.

Related Courses

How to Audit Payroll
Optimal Accounting for Payroll
Payroll Management