What is a payroll cycle?

A payroll cycle is the recurring schedule an employer follows to track employee work, calculate wages, withhold taxes, and issue payments. It includes the start and end dates of a pay period, a payroll cut off date for submitting hours and adjustments, and a payday when compensation is delivered.

The payroll cycle affects everything from employee morale to cash flow, tax filing frequency, and operational workload. For employers, understanding how payroll cycles work—and selecting the right one for your business—can reduce administrative strain, ensure legal compliance, and improve financial predictability.

Why payroll cycles matter for employers

Payroll isn’t just a routine task—it’s a legal and financial obligation. Choosing the wrong payroll cycle can lead to compliance issues, employee dissatisfaction, and poor cash management. Here’s why employers need to pay close attention:

• Cash flow alignment: More frequent payroll runs mean more frequent cash outflows. A small business with tight margins might benefit from semi-monthly or biweekly payroll instead of weekly.
  
  
• Employee satisfaction: Hourly workers often prefer weekly or biweekly pay, especially in service industries. Infrequent pay may create financial stress.
  
  
• Administrative burden: Each pay run involves tax calculations, filings, direct deposits, and reporting. More frequent cycles increase the admin load.
  
  
• Compliance requirements: States have minimum pay frequency rules, and failure to meet them can result in penalties or lawsuits.
  
  
• Integration with benefits and accounting: Your cycle must align with health benefits, paid leave accruals, and accounting timelines to avoid mismatches and misreporting.
  

Common types of payroll cycles

Weekly: Employees are paid once a week (52 pay periods per year). Common in retail, hospitality, and construction. This option offers frequent paydays, which is attractive to hourly staff, but creates more administrative work for employers.

Biweekly: Employees are paid every other week (26 pay periods per year). A balanced choice for both hourly and salaried employees. Easier to manage than weekly payroll, but still provides employees with frequent pay.

Semi-monthly: Employees are paid on set dates twice per month (typically the 15th and last day), totaling 24 pay periods annually. This schedule syncs well with monthly accounting and benefits cycles, but may create complexity when hourly employees work uneven shifts.

Monthly: Employees are paid once per month (12 pay periods). This reduces admin work, but is the least favorable for employees relying on frequent pay. Not legal in some states for hourly workers.

Components of a payroll cycle

A payroll cycle involves multiple steps that must be completed consistently and accurately:

• Time tracking: Employees log hours worked, including regular time, overtime, PTO, and sick leave.
  
  
• Payroll cutoff: The employer sets a hard deadline for when hours and bonuses must be submitted and approved.
  
  
• Payroll processing: Gross wages are calculated, taxes and deductions are withheld, and employer-side taxes are computed.
  
  
• Payment: Funds are transferred from the employer’s payroll account to employees via direct deposit or checks.
  
  
• Tax remittance: Withheld taxes are submitted to the IRS and relevant state or local agencies.
  
  
• Recordkeeping: Payroll reports and receipts are stored for audit, reporting, and compliance purposes.
  

Legal and compliance considerations

Payroll cycles must comply with both federal and state wage laws. While the Fair Labor Standards Act (FLSA) doesn’t mandate pay frequency, many states do. For example:

• California: Employees must be paid at least twice a month.
  
  
• New York: Manual laborers must be paid weekly.
  
  
• Texas: Exempt employees can be paid monthly, but nonexempt employees must be paid at least twice a month.
  
  

Non-compliance with these rules can result in penalties, wage claims, and reputational damage. Employers should always verify local requirements before choosing or changing a payroll cycle.

Choosing the right payroll cycle for your business

There’s no one-size-fits-all approach. Your decision should be based on:

• Industry norms – Restaurants and shift-based businesses typically lean toward weekly or biweekly payroll.
  
  
• Cash availability – Can your business handle frequent payroll without creating cash flow gaps?
  
  
• Employee needs – Workers who rely on consistent income may prefer frequent paydays.
  
  
• Payroll provider capabilities – Some providers charge per payroll run. Fewer runs can save money.
  
  
• Compliance rules – Some states restrict how infrequently your payroll cycle can be.
  

Reassess your payroll cycle if your business scales, shifts employee types, or expands across state lines.

How Homebase simplifies payroll cycles

Homebase Payroll gives you full control over your payroll schedule—without the manual work. You can customize your cycle to fit your business, whether that’s weekly for hourly staff or semi-monthly for salaried employees.

With Homebase, you can:

• Choose weekly, biweekly, or semi-monthly pay cycles
  
  
• Track employee hours in real time with built-in time clocks
  
  
• Automatically calculate wages, overtime, and tax withholdings
  
  
• Pay employees via direct deposit
  
  
• Remit payroll taxes to federal and state agencies
  
  
• Store payroll reports and pay stubs for recordkeeping and audits
  

Explore Homebase Payroll to automate your payroll cycle, stay compliant with labor laws, and keep employees paid on time, every time.