Payroll Planning 101: Why Deadlines Matter for Compliance & Budgeting
Simple payroll errors are avoidable, but if you don’t pay attention, you could potentially end up facing consequences that cost thousands of dollars in compliance penalties. To mitigate the risks and minimize unfavorable outcomes, pay attention to every payroll-related deadline. Keep all action items for every pay period in mind, too.
The best way to do this is by implementing a payroll calendar. These are specifically designed to help companies create a budget and plan for compensation expenses in advance over the course of an entire year.
But how can you make payroll calendars work for you? And what should you do if you are concerned about missing deadlines?
How to ensure that your company adheres to a set payroll schedule
It’s best to determine payroll dates each calendar year before the start of the year. That way, you can budget better while maintaining compliance with wage payment and tax-deposit rules and regulations. And when you utilize a detailed payroll calendar, you can not only pay attention to actual check dates but also pay period dates, time sheet due dates and the working days covered by each pay period.
Payroll calendars ensure that payroll-related administration tasks are completed on time.
When to make adjustments to payroll-related deadlines
Under certain circumstances, you might need to adjust your payroll calendar if one or more processing or pay dates fall on the same day as a holiday. Likewise, adjustments may be required in situations where payday for the last week of the year falls on a day in the following year.
Tips for preparing a payroll calendar
Start by figuring out how frequently your company plans to issue paychecks to your employees. Biweekly pay periods are the most common payday schedule, though it all depends on pay frequency laws in your area and the your business-related needs.
With these details in mind, consider whether you’d like to pay your employees on a weekly, biweekly, semi-monthly, or monthly basis. It’s important to make this decision prior to creating your payroll calendar. Just make sure you double-check any and all state laws or local regulations to see if there are any pay frequency restrictions by which you must abide.
Three examples of common payroll schedules
There are three main pay period schedules that most companies utilize, weekly, biweekly and semi-monthly payroll schedules.
Weekly payroll schedules
Weekly payroll schedules provide employees with a paycheck every week, typically on the same designated day. This schedule is common in industries with hourly workers, such as retail, hospitality, and construction, where employees rely on more frequent pay to manage their finances.
With 52 pay periods in a year, weekly payroll requires a well-structured payroll process to ensure accurate and timely payments. While this schedule provides employees with consistent cash flow, it also demands more frequent payroll processing, tax calculations, and reporting. Employers must account for these administrative requirements when selecting a weekly payroll schedule.
Biweekly payroll schedules
Biweekly payroll schedules pay employees on the same day every other week. Biweekly processing is beneficial, though it requires you to be flexible during those months where there are three paydays instead of the typical two pay dates.
There are typically 26 biweekly pay periods in a given year, but in some instances, you might find that there are actually 27 pay periods. Review how many paydays there will be in the upcoming year before you commit to the dates in a biweekly payroll schedule.
Semi-monthly payroll schedules
With semi-monthly payroll schedules, pay periods occur on the same date twice each month. For example, the 5th and 20th, or 15th and 31st, etc. You might need to adjust your payroll calendar if the payday date falls on a weekend or a holiday as these are when banks are typically closed, so always keep this in mind when creating a payroll schedule.
Payroll calendars serve a variety of purposes ranging from serving as a visual tool to helping track pay periods, tax deadlines and more.
It all comes down to scheduling pay dates so that you can improve the planning and budgeting protocols within your company. Plus, with a calendar, you can actively plan your payroll dates for the year. From there, you can take the necessary steps to ensure that you have the staffing, and the financial resources needed to pay for them.
Staying ahead of payroll deadlines is key to avoiding costly compliance penalties. Learn how a payroll calendar can keep your business on track: Why Small Businesses Are Switching to Ahola.
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