Payroll can be a headache for small business owners. Making sure everyone gets paid on time and staying compliant with tax laws can be challenging. But creating a payroll calendar can simplify this process and make sure everything runs smoothly.
As a small business owner, managing payroll is one of the most important tasks you’ll face. Not only do you need to ensure that each of your employees receives their paycheck on time, but you also need to stay compliant with tax laws and regulations.
One of the best ways to keep your payroll organized and streamlined is to use a payroll calendar. In this guide, we’ll explore everything you need to know about payroll calendars, including what they are, how they work, and why they’re essential for small businesses.
We’ll help you understand what payroll calendars are, show you how they work, and explain why they’re important for your small business.
What Exactly is Payroll Calendar
Payroll is the process of paying employees on a predetermined timetable. Your payroll schedule for the year must at least detail the pay periods and payment dates. Payroll schedules may also detail pay periods, timesheet due dates, and payroll processing hours.
4 Major Reasons Why You Need a Payroll Calendar
- Managing financial flow strategically
- Internally-coordinated structures
- Motivating employees
- Respect for local regulations
Cash flow, organization and outsourcing of bookkeeping and accounting, employee relations, and legal compliance can all benefit from payroll calendars. The advantages can be summarized as follows:
Cash Flow Planning is Crucial
Payroll shouldn’t be an unexpected cost, but it could happen. You can keep track of your upcoming obligations and plan accordingly with the help of a payroll calendar. Cash flow forecasting is another useful feature of this tool.
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Organized Internally
You may keep your internal accounting systems more organized and prevent missed payments and errors by keeping a payroll calendar. The use of a payroll calendar also facilitates outsourcing of payroll duties to a third party such as an accountant or bookkeeper.
Better Employee Communication
Your staff deserves a clear payment schedule. The employer-employee relationship can suffer from a delay in payment or a misunderstanding of the payment schedule. With a payroll schedule in place, both you and your employees will know exactly when money will be coming in and going out.
According to Law
The frequency of paychecks is governed by many US states. Creating a payroll schedule can assist in maintaining compliance. Also if you reside outside of the US, you may check the law from your place too.
Payroll Calendars: Advantages & Disadvantages
Most employers pay their staff on a weekly, bimonthly, semimonthly, or monthly schedule. The advantages and disadvantages of each are outlined below.
Weekly Payroll
If you use a 52-week calendar, each pay period falls on the same day of the week, every week of the year.
Advantages
This payroll plan is ideal for businesses with hourly workers and fluctuating income and labor needs. A weekly payment plan helps streamline timekeeping and better align payroll obligations with business income if employees work more when you’re busy and less when you’re not.
Disadvantages
The payroll procedure becomes increasingly time-consuming as the frequency of employee payments increases. This timetable is not practical if your company’s activity is relatively stable over time.
Businesses like restaurants and retail businesses that see a spike in foot traffic after hours often use weekly payroll schedules. This compensation plan could also be appealing to the boss of an online retailer who needs more hands during the busy holiday season.
Biweekly Payroll
Biweekly Payroll is done every two weeks or twice a week
Advantages
This payment plan provides most of the advantages of a weekly schedule while reducing the total number of payroll periods per year by half. A biweekly payroll plan, like a weekly one, helps to balance off payroll costs with cash flow. Both hourly wages and salaried workers can use this method with no problems.
Disadvantages
Inconsistent monthly payroll obligations are a direct result of biweekly payment schedules. Payroll costs are increased by 50% in the two months of the year when employees are paid thrice in a single month (this also occurs with a weekly payroll cycle).
You should probably avoid a biweekly payroll schedule if you don’t have enough cash on hand to handle the inevitable fluctuations.
Rent and utilities can be particularly significant monthly outlays for many storefront business owners. This can make it challenging to meet other financial obligations on the same pay schedule as three employee payments each month.
However, this plan could work for online store owners who don’t have a lot of recurring bills.
Semimonthly Payroll
Similar to biweekly schedules, semimonthly payroll calendars include set pay dates for both the first and the last pay periods of the month. This means there will only be 24 pay periods every year.
Advantages
Your monthly payroll obligations will remain consistent on a semimonthly payroll schedule, which is not the case with a biweekly schedule. This plan can be useful for budgeting because so many expenses occur on a monthly basis.
Disadvantages
Since semimonthly payments are calculated using a calendar date rather than a work week, they may not coincide with your employees’ pay periods. Because of this, if you have employees that are paid hourly, you should try to avoid a semimonthly schedule.
For online store owners who have salaried employees, a semimonthly payroll schedule might be a suitable compromise between paying workers more frequently and keeping monthly costs stable.
Monthly Payroll
If you follow a monthly payroll schedule, your employees will be paid 12 times a year, on the last day of each month or on a designated day.
Advantages
A monthly salary has its advantages. With a monthly payroll schedule, you’ll only have to process payroll once every month. If your workers are salaried, paying them once a month allows you breathing room if there are any brief dips in revenue.
For instance, if sales are down for a week, you have more than three weeks until payroll is due.
Disadvantages
Monthly payroll has its drawbacks. Paycheck frequency is optional for employers but is required by law in several US states.
eCommerce business owners that pay their employees a salary may find that a monthly payroll schedule is the most convenient option in states that permit such payments.
Creating a Payroll Calendar
- Make a decision on a pay cycle.
- Make a plan for handling payroll.
- Establish the timing of payroll payments, periods, and processing.
- Take holidays into consideration
- Create alerts for yourself
Creating a payroll schedule requires little effort, even for those who have never done so before. Just do what we say below.
1. Make a Decision on a Pay Cycle
The hardest element of creating a payroll calendar is deciding on a payroll schedule. When deciding on a payroll schedule for your small business, it is important to consider state regulations, the different types of employees you have, and the cash flow cycle.
2. Make a Plan for Handling Payroll
You’ll need to make a decision on whether or not to use payroll software or to have a bookkeeper or accountant handle payroll on your behalf.
- Give your accountant or bookkeeper payroll, employee, and financial institution information.
- You or your accountant/bookkeeper must enter the payment schedule and accounting details into the payroll program. Verifying due dates and sending reminders will streamline payroll.
- Step three is for you if you process payroll manually.
3. Establish the Timing of Payroll Payments, Periods, and Processing
To find out when your paychecks will be issued this year, consult the calendar. The time it takes to execute payroll for employees’ payments can be estimated backward from their actual pay dates.
4. Take Holidays into Consideration
Weekends and holidays should not be overlooked. It is inevitable that one of these dates will be a payday if payments are made according to the calendar.
If you pay employees on a specified day, you need to know about bank holidays. Even if your organization is open, banks will be closed due to Federal Reserve System vacations.
If your expected payment date is a weekend or holiday, you should enter the last working day before the holiday or the first business day after the holiday as your payment date.
5. Make a Reminder.
Make a yearly calendar reminder for when to start processing payroll and include the pay date. Send them a note to inspire them to repeat the same routine next year.
Things to Keep in Mind While Planning Out Your Payroll
The following factors should be taken into account while deciding on a schedule and creating a payroll schedule:
Employee Types
Do you employ only hourly workers, only paid workers, or both? Salaried employees typically receive the same amount of money every pay month, while hourly workers’ wages fluctuate. To better manage cash flow, you should know which option is ideal for your company.
Cash Flow
Think about when and how your company produces money. Take a look at your cash flow over the course of a year and mark off any slow times or holidays that could provide a problem for making payroll.
Payroll Processing
Do you plan to use payroll software, be an accountant, or do the job yourself? While handling payroll in-house can save money, it also adds more work, especially if you use a calendar with many pay periods. More frequent payroll processing is often met with an uptick in fees from bookkeepers and accountants.
Wrap Up
A payroll calendar is an essential tool for small business owners to manage their payroll process effectively. You’ll be well-equipped to create a payroll calendar that works for your business, streamline your payroll, and achieve peace of mind every pay period.
Using a payroll calendar can make payroll management a lot easier for small business owners. stay compliant with payroll taxes, and ensure timely payment for your employees. you can spend less time worrying about your payroll and more time growing your business!
A payroll calendar can make all the difference for small business owners looking to manage their payroll efficiently. This tool provides a structure for when payroll is due, when taxes must be filed and paid, and when important deadlines and holidays fall.
That’s all for now. Until next time!
Adios!