Did you know that about 40% of small businesses find payroll and bookkeeping to be the most complicated aspect of running their operations? As we enter 2024, it’s crucial for small business owners and payroll professionals to understand the various pay periods and how many pay days there are in a given year. This knowledge is not just a compliance requirement; it’s key to effective planning and employee satisfaction. In this article, you’ll learn about the different types of pay periods, how many there typically are, and specifically, how many pay periods and pay days you can expect in 2024.
What are the different pay periods?
Understanding the types of pay periods is essential for accurate payroll management. The four common types are weekly, biweekly, semi-monthly, and monthly, each with its unique characteristics and implications for both employers and employees.
Weekly pay periods: In this system, employees receive a paycheck corresponding to each week. This frequency is particularly advantageous for workers as it provides a steady and predictable cash flow, beneficial for those managing weekly expenses.
Biweekly pay periods: Paychecks are issued every two weeks. This is the most common pay schedule in the U.S. with 42% of businesses using biweekly pay. This pay period balances the need for regular employee income with a manageable payroll processing workload for employers.
Semi-monthly pay periods: In this arrangement, employees are paid twice a month, usually on set dates such as the 1st and 15th, resulting in 24 pay periods per year. This schedule can be beneficial for both budgeting and cash flow planning.
Monthly Pay Periods: This schedule involves 12 pay periods per year, with employees receiving one paycheck each month. While it’s the least frequent pay schedule, it simplifies payroll processing significantly. This schedule might be more challenging for employees who need to manage their budget to stretch over a longer period until the next paycheck. It is important to note that many states have laws surrounding how often employees need to be paid. For example, employees in Maine must be paid at least once every 16 days, eliminating the possibility of employers using monthly pay periods if their business has employees.
Each of these pay periods has its advantages and challenges. It’s crucial for businesses to consider both operational efficiency and employee needs when deciding on the pay period.
What days are included in a pay period?
Next, let’s talk about what days a pay period consists of. The definition of a pay period can vary based on the type of schedule chosen by the employer.
Weekly pay periods: In a weekly pay schedule, a pay period typically covers seven consecutive days. Employers may choose any day of the week to start the pay period, such as Sunday through Saturday or Monday through Sunday. The chosen start day will consistently mark the beginning of each new pay period throughout the year. Choosing a more unique start day like Tuesday or Wednesday is a potential way to reduce overtime costs, especially for hospitality businesses.
Biweekly pay periods: For biweekly schedules, a pay period encompasses a 14-day cycle. Similar to the weekly schedule, the employer selects a start day, and the pay period will consist of the following 13 days. This cycle repeats every two weeks.
Semi-monthly pay periods: In a semi-monthly pay schedule, the pay period is typically defined by specific dates. Commonly, businesses opt for pay periods that fall on the 1st and 15th of each month . However, these dates can vary based on company policy.
Monthly pay periods: Monthly pay periods are the most straightforward. Each pay period begins on the first day of the month and ends on the last day of the month. This schedule provides clear and predictable pay periods.
The determination of what days are considered in a pay period is essential not only for calculating regular wages but also for determining overtime, leave accruals, and fringe benefits. Employers must clearly communicate the structure of pay periods to their employees. Additionally, the alignment of pay periods with workweeks can be crucial for compliance with labor laws, particularly in calculating (blended) overtime for hourly employees.
How many pay days are there typically?
Typically, the number of pay days in a year depends on the chosen schedule. However, with weekly and biweekly payrolls, the pay day you choose, along with leap years, can impact how many payrolls you may have in a given year. Here are the amount of pay days in a typical year.
- Weekly: 52 pay days.
- Biweekly: 26 pay days.
- Semi-monthly: 24 pay days.
- Monthly: 12 pay days.
It’s important to note that the number of pay days affects not just how often employees are paid, but also the size of each paycheck, the amount of payroll taxes paid each period, and the payroll processing workload.
How many pay days are there in 2024?
The year 2024, like any other, has its specific number of pay periods depending on the chosen payroll schedule and pay day. If your business has a weekly or biweekly pay period, the amount of pay days in 2024 may be different than the typical amount. Here’s a breakdown:
How many weekly pay days in 2024?
- If your pay day is Monday, there are 53 pay days.
- If your pay day is Tuesday, there are 53 pay days.
- If your pay day is Wednesday, there are 52 pay days.
- If your pay day is Thursday, there are 52 pay days.
- If your pay day is Friday, there are 52 pay days.
How many biweekly pay days in 2024?
- If your pay day is Monday, and your first pay day of the year falls on January 1st, there are 27 pay days.
- If your pay day is Tuesday, and your first pay day of the year falls on January 2nd, there are 27 pay days.
- If your pay day is Wednesday, there are 26 pay days.
- If your pay day is Thursday, there are 26 pay days.
- If your pay day is Friday, there are 26 pay days.
What should employers do to deal with an extra pay day?
There are three options you have to manage a year with an extra payday.
You pay your employee an extra paycheck: Say you pay your employees $52,000 per year or $1,000 per week. In this scenario, your employees would receive $53,000 for this particular year. This can be a nice bonus for your employees. Just be sure to plan for that in your yearly financial payroll calculations.
You adjust your employee’s weekly pay or pay them semimonthly: Another option would be to calculate your employees pay based on 53 weeks or 24 payments (semimonthly) on 2 designated days of each month. This way, your employees are not receiving extra pay throughout the year. For example, you would divide $52,000 by 53 weeks as opposed to 52 weeks. Instead of $1,000 per week, your employees would receive $981.13 per week.
You do not pay your employee on the last payroll of the year: This option may be the least popular in your employees’ minds. It is ok to not want to pay your employees an extra paycheck in a year with 53 paydays, but consider the other options before this one. If this is the path you do choose to take, make sure to communicate this decision with your employees well beforehand. Springing this upon them at year end will likely result in some very unhappy employees.
Knowing how many pay days are in 2024 is a key piece of information that can help when planning your yearly budget. Whether you’re a seasoned payroll professional or a small business owner managing payroll for the first time, understanding these nuances is vital for effective business and financial management. As you plan for 2024, consider how each pay period schedule aligns with your business needs and employee expectations to choose the most suitable option. Contact our team for additional help with this topic or any of your payroll needs.