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What Is a Payroll Schedule & Which Is Right for Your Business?


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Updated on:
April 11, 2024
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Updated on :

April 11, 2024
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What Is a Payroll Schedule & Which Is Right for Your Business?


Ask any employee when they expect their next paycheck, and they will most likely be able to tell you the day. While paying your employees on a set schedule is essential, many complexities go into processing payroll, such as payroll tax withholding, benefits deductions, calculating accrued paid time off, and much more.

Keeping that in mind, how can you determine the payroll schedule that works best for your company? For that matter, what is a pay schedule? Read on to learn more.

What is a payroll schedule?

Quite simply, a payroll schedule is a frequency with which you pay your employees. Your payroll schedule determines when and how often your employees can expect a paycheck. Setting a regular pay schedule allows employees to budget based on a predictable income.

A payroll schedule differs from a pay period, which describes the time your employees accrue hours toward one paycheck. After the pay period ends, the employee's work hours accrue toward the next paycheck.

On the company's end, paying your employees on a consistent schedule simplifies the management of your company's finances. Various factors contribute to your business's payroll schedule, including your labor market expectations, local employment legislation, and the cash flow of your particular company.

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What are the common payroll schedules?

There are four common types of payroll schedules, each with particular advantages and disadvantages, all detailed here.

Weekly pay schedule

Every week, your employees receive their pay on a specific day of the week, such as Friday. This means your employees receive 52 paychecks every year. Weekly payroll may be an excellent option if your employees are paid an hourly rate and have irregular schedules.

  • Advantages: This payroll schedule is a popular option in companies where hourly employees work irregular schedules or frequently accrue overtime hours. A weekly payroll schedule ensures these employees are paid expeditiously for their work and are not required to wait extended periods to receive payment for their overtime hours.
  • Disadvantages: Weekly payroll is inefficient for salaried employees, whose paychecks are generally the same amount each time. Because weekly pay schedules contain the largest number of pay periods, they also result in the highest processing cost and increase the company's required time processing payroll. Your HR department must spend significant time each week calculating the number of hours worked by each employee and include all pertinent information on each weekly paystub.

Bi-weekly pay schedule

When using a bi-weekly payroll schedule, you will still pay your employees on the same day of the week, but only every other week instead of every week. For example, you may choose to pay your employees every other Friday. With this method, you will pay your employees 26 times each year.

At least in the United States, biweekly is the most common payroll schedule. According to the U.S. Bureau of Labor Statistics, as of 2022, almost half of all U.S. employers pay their employees bi-weekly. Weekly is the next most popular pay schedule used by 31.8% of U.S. employers.

  • Advantages: Bi-weekly pay schedules are a simple way to calculate accumulated overtime for employees who are paid an hourly wage. Employees receiving a paycheck every two weeks allows them to manage their finances. For example, employees who are out sick for a week attempt to make up hours the following week.
  • Disadvantages: Because most benefits are calculated monthly, a bi-weekly payroll schedule can make it challenging to calculate the appropriate benefit deductions from each payroll. Also, although ten months out of the year will require payroll to be processed only twice, two months will contain three payroll processing periods, which may mean additional work that month for your HR staff or payroll administrator.

Semi-monthly pay schedule

Using a semi-monthly payroll schedule, you will pay your employees twice a month, usually on the same two days each month. For example, you may pay your employees on the first and 15th day of each month or perhaps the seventh and 22nd. Using this method, you will pay your employees 24 times per year.

  • Advantages: Unlike bi-weekly pay schedules, a semi-monthly pay schedule makes it easier to calculate benefits deductions because many common benefits are paid monthly. Using a semi-monthly payroll schedule requires less time and cost for each pay period. Accounting teams will likely find this schedule easier to manage, and salaried employees will find it easier to budget their finances with the knowledge that they will receive exactly two paychecks each month.
  • Disadvantages: Tracking overtime for hourly employees can be more challenging on a semi-monthly payroll schedule. Also, depending on your company's cash flow situation, it can be difficult to budget appropriately when you have to pay out large amounts on the same day.

Monthly pay schedule

When following a monthly payroll schedule, you will pay your employees once per month, usually on the last business day of the month. Some state regulations only allow sole proprietorships or partnerships to follow a monthly payroll schedule because it can be difficult for employees to stretch a single paycheck for an entire month.

  • Advantages: The most apparent advantage of using a monthly payroll schedule is that there are only twelve pay periods per year. Observing a single pay period each month means less time spent processing payroll, which, in turn, means lower payroll processing costs. A monthly payroll schedule also makes it easy to calculate and manage benefit deductions, which most payroll administrators charge monthly. In addition, if your company offers its employees a 13th-month payment, a monthly pay schedule makes this simple to calculate.
  • Disadvantages: Because following a monthly payroll schedule is appropriate in only a few situations, this payroll schedule is the least popular in the U.S., where just 4.4% of employers process payroll only once a month. One paycheck per month can make it a major challenge for your employees, particularly those paid hourly, to manage their household finances adequately. New employees may find it frustrating to wait an extended time before receiving their first paycheck, which may also mean a delay in their ability to enroll in benefits programs.

Which payroll schedule is right for your business?

Deciding on a payroll schedule depends on several factors specific to your industry or company. You should consider these essential factors when deciding.

Employee preferences

Your employees likely expect their payroll schedule to mirror industry norms, market standards, and or even payroll schedules observed by their previous employers.

Businesses that rely on manual labor, retail establishments, and restaurants tend to favor a weekly payroll schedule. Employees in these industries generally receive an hourly wage and a weekly paycheck. If your company goes against the norm and pays your employees monthly, this may upset existing employees and repel potential hires.

State payroll laws

Depending on local employment regulations, you may be required to pay your employees more frequently. In the U.S, the laws governing payroll schedules can vary widely. Some states, such as Arizona and Maine, require employers to pay their employees at least twice per month, and each paycheck must be no more than 16 days apart. Some states allow employers to decide whether they will pay their employees weekly, bi-weekly, semi-monthly, or monthly. Other states dictate that the frequency of pay periods depends on the occupation, and some have no regulations covering payroll.

Employers within the U.S. must follow their states' rules and stay up to date on any changes to the legislation governing payroll. If you fail to adhere to your state's laws, you and your company may face financial or criminal punishments.

International payroll laws

In recent years, many companies have expanded their hiring to a global level, building remote teams worldwide. This has made these companies need to manage international payroll processes. Suppose your company is among the many who have embraced the globalization of the workforce. In that case, you must consider international payroll laws, which may impact the payroll processing schedule you choose.

Learning and understanding the ins and outs of global payroll processing will allow you to make the best decision for your company and your employees.

Over time, benefits, and payroll processing costs

It can take extra time to calculate overtime hours accumulated and the benefits owed to each employee. The more frequently your company processes payroll, the more time and cost are involved. Keep this fact in mind when deciding how often your company will process payroll.

No matter your payroll schedule, Skuad can help

Choosing the frequency of your payroll processing schedule can be a complicated endeavor, but you need not be overwhelmed by paying your local and global employees. Skuad's intuitive, user-friendly interface allows you to pay your international team with a single click.

Skuad's offerings let you easily build and pay your diverse, globally-distributed workforce. For more information, request a demo today.

About the author

Nathan Williams is a Global Payroll Specialist and Finance Consultant. With a background in banking and finance, he is passionate about modern tech practices in payroll management and using global payroll platforms for global payments.

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