- Last Updated on:   March 18th, 2019
- Posted by: QB
- Category: QuickBooks Payroll
QuickBooks is an exceptional accounting and bookkeeping made possible by Intuit. This software has all functionalities which your business needs. One of the most important functions is payroll. But how to judge whether Weekly Payroll is better or Monthly Payroll is better. To help you in this confusion, we have tried to project the purposes of both payroll methods and unbiased pros and cons. We hope that you find this helpful. Empowering employees is a symbol of growth, but it also comes with important decisions and responsibilities, including payroll. Once you sort out the legal requirements, you’re left with the settlement of how often to run payroll. Weekly, biweekly, and monthly are the most common choices with some pros and cons of each to consider before choosing.
Sending out weekly pay cheques follows in processing payroll 52 times per year and incurring the relevant service fees each week, whether you run payroll in-house or outsource it. Employees earn their paycheques on the same day each week, usually on Friday, for the salaries, hourly, and/or overtime pay they received through the seven-day span the cheque covers.
Pros of Weekly Payroll
Many employees enjoy getting paid every week. It keeps a patterned movement of money reaching into their bank accounts, which can make it easier to budget household finances. When an hourly employee works overtime, they get paid for those extra hours sooner preferably than having to pause two weeks or even till the end of the month to get the extra money. That can be particularly helpful if the weekly schedule alters significantly. For example, if an employee achieves 65 hours one week and only 25 hours the next week, it’s helpful to have that extra overtime pay before heading into the lighter schedule week. If you recommend weekly payroll, you can consider high employee happiness.
On your end, calculating overtime is an honest process if you have hourly employees on staff. Since the pay period tallies with the work week, it’s easy to calculate any additional pay. With monthly pay periods, the first and last week of the month is usually partial weeks, which can hinder your calculations. Weekly pay periods also make it simpler to understand when time cards or time reports are payable. The payable date remains the same every week since you run payroll on the same day each week. On a monthly inventory, the cut-off for turning in pay may vary from one month to the next depending on when the end of the month falls.
Cons of Weekly Payroll
One of the biggest disadvantages of weekly payroll for you as the employer is the time plus cost. Since you have to run payroll every week, that can take you away from other duties, or it indicates the staff member appointed to handle payroll gets drawn away from other duties. If you pick someone to do payroll, they get paid each time it’s run, improving your overhead.
Distributing pay more often can also come at a cost if you issue conventional paper cheques, wasting money on the cheque forms and the ink to print them. If you use direct deposit, you may have to pay a small fee per deposit depending on the service you practice. Paying those fees every week adds up. You can probably cut those fees in half by preferring biweekly or monthly pay periods.
When you run payroll every other week, which occurs in 26 pay times per year then maximum months have two paydays, but some months have three. Just like a weekly pay period structure, the bi-weekly structure means your employees get paid on the corresponding day of the week each time but only all another week. So you might pay them all Friday, for example. This option is diverse than paying employees semimonthly, where they always get just two paycheques per month, for a total of 24 pay periods. A semimonthly plan typically pays employees on the 15th and the last day of the month rather than paying every another week.
Pros of Biweekly Payroll
Balanced to a weekly payroll schedule, bi-weekly payroll frees you a notable amount of time since you simply have to run it every other week. You save money on direct deposits and cutting cheques since you do these tasks half as many times per year. Running payroll less frequently also means less risk of error. If you’re running it weekly, you have more possibilities to include human error into the equation. Biweekly payroll also adjusts well with the work weeks, which makes it easy to add overtime for the two weeks that fall into each pay period.
Cons of Biweekly Payroll
One disadvantage of biweekly payroll is adjusting the monthly expenses with the pay periods. When you run payroll monthly, it’s easy to determine monthly thoughts. With weekly and biweekly payroll, the first and last paydays of each month often actually span two separate months. The first pay cheque in March may include a few days from February, while the last pay cheque might cover a few days of April. (For example, adding some complexity to concluding calculations.)
If you enroll for monthly payroll, you only run payroll once a month and your employees solely receive one paycheque per month for a total of 12 cheques per year. The precise date can alter. For example, you might run a payroll each month on the 20th. Monthly payroll isn’t as prevalent anymore. Employers don’t receive any huge benefits for only running payroll once per month, and its offensive with employees due to complications in budgeting.
Pros of Monthly Payroll
Monthly payroll is comparatively straightforward to handle. You only have to concoct it once per month, and it adjusts well with all monthly payroll deductions you need to get, such as taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums. Alternately of dividing those deductions over various cheques per month, you can use the full amount out of the single cheque for each employee.
Cons of Monthly Payroll
Many regions allow monthly payroll, but others want you to pay your employees more regularly. In British Columbia, companies have to pay their employees at least double per month. That suggests you need to at least opt for a semimonthly pay period, which means you pay your employees twice per month. Generally on the 15th and the last day of the month. Other regions have many laws for salaried versus hourly employees. In Saskatchewan, if you employ monthly salaried employees, you can pay them on a monthly basis, however, for all other employees, you need to pay at least semimonthly.
Another issue with monthly payroll is your employee redemption. It’s often not as easy for employees to stretch their money out over the complete month. In theory, since most bills happen on a monthly basis, they should be ready to pay their bills when they get their pay cheque and budget the rest for other charges. In practice, it’s challenging to proportion the money for the whole month, especially for employees who live pay cheque to pay cheque. If they have trouble establishing a monthly budget routine, they may have trouble getting by unto they get paid again, making them all kinds of difficulties.
Deciding Between Payroll Options
Before studying at anything else, look at the payroll ordinances in your region. Monthly payroll may not be a profit if you run a business in a region that wants at least two pay periods per month. Once you familiarize yourself with the laws, you can measure the pros and cons of your particular events. A frequent payroll period assists employees avoid having “more month at the end of the money” as the saying goes.
Staring at the costs and time involved in many payroll options can help you pick what’s best for you. A biweekly pay structure is oftentimes a good balance amid keeping employees happy and balancing your costs without scoring to your bookkeeping or financial burden.
Changing Your Payroll Frequency
If you now have employees but are considering your payroll frequency, give yourself some time to handle the change. The move may turn the math. If you’re using payroll software, the program controls the calculation changes for you, which is one of the significant perks of using computerized payroll systems. Likewise, if you outsource payroll, your vendor manages the changes in calculations. Keep in mind you may have to pay more if you boost the frequency of payroll because your provider may charge for every run.
Prepare your employees for any adjustments in payroll. It’s a good idea to let your employees know at least a month in advance. If you’re moving to shorter pay periods, such as shifting from monthly to biweekly, your employees are expected to acknowledge the change and won’t need a long lead time before the switch. On another hand, if you’re moving from paying weekly to biweekly, give your employees ample notice so they’re qualified to go longer within paycheques.
When deciding on the frequency of pay periods, you’re eventually attempting to gain a balance among a cost-effective solution for you and a schedule which keeps your workforce comfortable. Considering the pros and cons of various regularities helps you find that balance and finding the right payroll solutions makes it simpler to process payroll no matter how frequently you do it.
Did you know you can pay employees in QuickBooks? Add Payroll today. Or in case if you need any support regarding QuickBooks Payroll then feel free to seek help and guidance from our QuickBooks payroll customer service team by calling them on their toll-free number at +1(800)-880-6389. They are Intuit Certified ProAdvisor and industries best accounting experts, they provide round the clock service.