Payday, Pay Schedule, and Pay Period: Important Differences You to Need to Know
Years ago, I had a mentor who used to say, “Words mean things.” Though it’s obvious to the point of being silly, it’s true. His point was that not all words can be used interchangeably.
A convenient and excellent example of this can be seen when using the terms Payday, Pay Period, and Pay Schedule. Each term references a specific event. If you used the phrase, “Payday” when talking about a “Pay Period,” you would change the meaning entirely, albeit unintentionally.
We are going to go over all three terms so that may speak to each with confidence. As a business owner, you will need to know the differences to either execute your payroll to employees or payments to your contractors.
This is the day on which someone expects to be paid.
Though that may sound simple, it’s not always possible to pay your employees or contractors on the same day. If you pay them weekly, then you can establish that they, for example, get paid every Thursday.
But if you pay them twice a month, you could plan to issue paychecks on the 1st and 15th of each month. However, these dates are inevitably going to land on weekends. Under this scenario you’d likely pay them on the Friday beforehand.
A pay schedule is an established length of time over which you record your employee’s hours and wages earned. There are different ways to do this.
With 123PayStubs, you can choose this length of time to be weekly, bi-weekly (every two weeks), semi-monthly (twice a month), monthly, quarterly, semi-annually, and even yearly.
According to the Department of Labor, paying your employees bi-weekly (every two weeks) or weekly is most common.
How often you run payroll or issue payments will likely depend on your business model. For example, when does the money come in and when does it need to go out? Before you make a judgment call for your small business, know that you may be limited to only a few options. How you run payroll will depend on which state you are operating out of, as each state has different laws governing your pay period intervals.
When using 123PayStubs, you will first need to choose your pay schedule. Afterwards, you will select your pay period.
These will be the specific dates that your pay period begins and ends.
Let’s Use an Example Combining All Three Terms
Pay Schedule: Monthly
Pay Period: 5/2/2020 – 6/2/2020
How 123PayStubs Can Help
123PayStubs is an incredibly efficient paystub generator. You can choose any pay schedule you want to fit the needs of your business. You can pick the dates of your pay period as well as your payday.
Should these dates overlap or are incorrect, you will be alerted and unable to complete the process.
We provide you options, you make the choices that are right for you.