Setting up and running payroll in ways that best benefit your business helps you work smarter and more efficiently. How often you pay employees affects your cash flow.

How often should you pay your employees?

• Know your state rules. Each state has different mandated pay periods. Most are weekly or bi-weekly, a few are monthly. Using the longest pay period possible minimizes your payroll processing and expenses.
• Be consistent. By law, you must choose a consistent schedule to pay your employees on the same day during every pay period. If you don’t, your business can be fined (you’ll also have angry employees). Assign the same days for internal payroll processing, ACH processing, and payday.
• Give yourself time. Create a schedule that gives you enough time to process payroll for all your employees. When calculating payroll, account for wages, bonuses, commissions, reimbursements, and paid time-off (such as holidays, vacation, sick time). Give yourself time to account for these factors before running payroll each pay period. More time means less mistakes.

Here’s a suggested weekly payroll schedule:

• Start your pay period on Sunday.
• Give yourself Monday and Tuesday to internally process payroll (in case of a Monday holiday you still have Tuesday to process).
• Wednesday and Thursday can be your 48-hour ACH processing period.
• Friday is payday.
• Saturday ends your pay period.

If your State allows you to go biweekly, start on Sunday and go 14 days to Saturday.