When you start out a business, one of the first things you need to do is decide when you will pay yourself. As the business grows, you will also need to make this decision for your employees. Will you pay everyone monthly? Twice a month? Weekly? There are a lot of options out there, and no reason you can’t use a variety depending on the type of employee. But the payment schedule you choose can have an impact on both you and your employees, so it’s important you choose carefully. So, we’ve created a list of things you will need to consider when choosing your payroll schedule, so that you can make the best decision for everyone involved.
Set the Date
It doesn’t matter how often you pay your staff, but it’s always easier to set a date, or dates, early on. This way, your employees know they get paid on the 25th of every month, or on the 5th and 16th, for example. This avoids confusion and helps keep everyone on the same page. It also makes it much easier for you to manage long-term as your team grows.
Consider Your Staff
The kinds of staff you employ and the industry you’re in will play a big part in how you decide your payroll schedule. For example, many corporate jobs will pay once a month, whereas some trades will pay twice monthly, weekly or even by the job. If your business pays staff by the job or by the hour, there’s a fair chance that cashflow will become an issue for them. If this is the case, weekly payroll might help, and allow you to maintain your preferred pay structure at the same time.
Benefits
When the government first introduced Universal Credit, it’s intention in making it a monthly paid-benefit was to make it easier to adjust to the typically monthly paid world of work. So if a significant proportion of your staff are receiving benefits, your payroll scheme could benefit from matching those payment dates. Alternatively, your staff might welcome a weekly element to their income. It’s worth having a discussion with your staff if this is a prominent issue for you, so that you can settle on a system that benefits everyone.
Costs And Admin
The physical running of payroll is a time-consuming task, and it only gets longer as your business grows. If you choose to do this in-house, then you need to be aware of the amount of admin running multiple payrolls through the month will take. This is why many businesses prefer to outsource their payroll to people like us. But if you do this, you are essentially swapping the time taken in your business to run weekly payroll for the cost of doing it. For monthly or bi-monthly payroll this isn’t usually a huge cost, and proves worth the trade-off.
Cashflow
And finally, as well as considering your employees cashflow, you need to consider how well the business cash flow will handle your chosen payroll schedule. From this point, the decision might well be out of your hands. If your customers all pay their invoices monthly, then you may not have much of an option but to operate a monthly payroll schedule – otherwise you would run out of money in the interim. If this is the case, you should make sure you explain to your staff why this is the case.
The simplest way of determining how often your staff would prefer to be paid is by asking them. If the response leaves you needing to change the date or frequency of your pay, you can find further guidance from the Government’s website. If you’re looking for someone who can manage your monthly payroll on an outsourced basis and help you decide on your schedule, then you’re in the right place. At Cove Accountants, we provide outsourced payroll services to cover every single aspect of paying your employees, from setting up new employees to arranging pension deductions and more. For more information, or to see how we could help you, just get in touch with us today.