What payroll period is best in 2025-2026?
- Rebecca Tabert, CPA
- Jul 27
- 8 min read
Do you know how often you should be running payroll? Picking the right payroll period can save you time, money, and stress. Here is what you need to know.
Payroll periods are the foundation of how your business handles paying employees and meeting tax deadlines. Choosing the right payroll schedule—weekly, biweekly, semimonthly, or monthly—can reduce mistakes, simplify tax compliance, and help ensure your workers are paid on time and accurately. It also affects when you must deposit payroll taxes and file required forms like Forms 941, 940, and state equivalents.
Many small business owners start with what seems easiest but later find themselves burdened by too many payroll runs or unexpected filing issues. A better approach is to evaluate your business needs, the type of work your employees do, and the filing rules that apply to your industry and location.
What is payroll and what are payroll periods?
Payroll refers to the total process of compensating your employees for their work. This includes calculating wages, withholding the proper taxes, submitting payroll tax deposits to the IRS and state agencies, and reporting wages on forms like W-2s and 941s.
A payroll period is the recurring schedule on which you calculate and pay wages. Each period also defines how often you withhold and submit payroll taxes. The most common payroll periods include:
Weekly: Employees are paid once every week (usually 52 pay periods per year). Common in industries with hourly workers such as construction or food service. We typically do not recommend this, due to the high-administrative demand and cost.
Biweekly: Employees are paid once every two weeks (typically 26 pay periods per year). Popular for both hourly and salaried employees. *We most often recommend this for most industries - it creates predictable, reliable paycheck days and financial planning for both business owners and their employees. Typical pay days are every other Friday.
Semimonthly: Employees are paid twice per month, typically on the 15th and last day of the month (24 pay periods per year). More common in office or salaried settings.
Monthly: Employees are paid once per month (12 pay periods per year). Least common due to potential employee cash flow issues. We typically recommend this for business owners and utilize it as a tax planning opportunity.
Each payroll period comes with its own set of advantages and challenges:
Weekly payroll provides faster payment cycles for employees but requires more frequent processing and tax deposits.
Biweekly payroll balances frequency and administrative workload.
Semimonthly is often preferred for easier monthly accounting but may complicate hourly wage calculations.
Monthly payroll lowers processing frequency but may lead to dissatisfaction among employees who prefer more frequent pay.
Choosing the best payroll period depends on your business’s cash flow, the type of work being performed, and your administrative capacity. The IRS does not require a specific schedule, but once chosen, your payroll period should be consistent and clearly documented.
Who is required to have payroll?
Any business that hires employees and compensates them with wages must have a payroll system in place. This applies whether you are a sole proprietor hiring your first worker or a corporation with dozens of staff. The IRS and state agencies require businesses to withhold income taxes, Social Security and Medicare (FICA) taxes, and sometimes state-specific payroll taxes from employee wages.
You are required to run payroll if:
You hire W-2 employees who work under your control, use your tools, and follow your schedule.
You pay employees more than $100 in cash or check wages in a calendar year (for most states).
You offer benefits like health insurance or retirement plans that are deducted from paychecks.
You are an employer entity such as an LLC, S corporation, or corporation, and you pay wages to owners or officers.
You are not required to run payroll if:
You only pay independent contractors who receive Form 1099-NEC (more on that in another section).
You are a sole proprietor or single-member LLC with no employees and take owner draws instead of wages.
You only reimburse business expenses or provide stipends without wages (though these can have tax implications).
Examples:
A contractor who hires a part-time office assistant must run payroll, withhold taxes, and issue a W-2 at year-end.
An S Corporation owner who works in the business is required by the IRS to pay themselves a “reasonable salary” via payroll.
A construction company using only subcontractors may not need payroll—but misclassification risks are high and penalties can apply.
If you are unsure whether your worker should be paid through payroll or as a contractor, it is critical to review IRS guidelines or speak with a tax professional to avoid costly reclassification audits.
What are the important dates for payroll periods?
Payroll periods must follow a consistent schedule, and each period sets a timeline for when wages must be paid and when taxes must be deposited. While you can choose your payroll frequency, once it is set, the associated deadlines become your responsibility. Missing these deadlines, even if unintentionally, can lead to penalties and interest.
Here are key dates and concepts you need to know:
Pay Date: The date employees actually receive their wages. This is what the IRS uses to determine tax deposit and reporting deadlines, not the day work was performed.
Payroll Period Start/End Dates: These are the specific days employees worked during the period. For example, a biweekly payroll might run from July 1 to July 14, with a pay date on July 19.
Tax Deposit Deadlines: The IRS requires most employers to deposit withheld taxes either semiweekly or monthly, depending on your total payroll tax liability.
If your business pays over $50,000 in payroll taxes per year, you will generally need to deposit semiweekly.
If under $50,000, you likely qualify for monthly deposits, due by the 15th of the following month.
Quarter-End Deadlines:
Form 941 is due quarterly and reports wages, withholdings, and employer taxes.
Typical due dates: April 30, July 31, October 31, and January 31.
Examples:
If your pay date is Friday, July 12, 2025, then that is the official “payroll date” the IRS recognizes—even if the work was completed in June.
If your business is a monthly depositor, the payroll tax for the July 12 paycheck must be deposited by August 15, 2025.
Understanding these dates ensures you do not accidentally miss tax deposits or report wages in the wrong quarter. Most payroll software will help automate this, but it is still the employer’s responsibility to ensure accuracy and timeliness.
What forms need to be filed for payroll and when?
Running payroll means more than just paying wages—you must also file specific tax forms with the IRS and state agencies on a consistent schedule. These forms report wages paid, taxes withheld, and employer contributions such as Social Security, Medicare, and federal unemployment (FUTA). Filing deadlines vary depending on whether the form is quarterly, annual, or tied to a pay period.
Federal Payroll Forms and Due Dates:
Form 941 (Employer’s Quarterly Federal Tax Return):
Reports wages paid, federal income tax withheld, and both employer and employee portions of Social Security and Medicare.
Due: Last day of the month following each quarter (e.g., Q1 due April 30, Q2 due July 31).
Form 940 (Employer’s Annual Federal Unemployment Tax Return):
Reports FUTA tax owed.
Due: January 31 each year for the prior calendar year.
Form W-2 (Wage and Tax Statement):
Issued to employees and filed with the Social Security Administration (SSA).
Due to employees: By January 31
Due to SSA: By January 31 (electronic or paper filing)
Form W-3 (Transmittal of W-2s):
Sent to the SSA along with the W-2s. Required only for paper filers.
Due: January 31
Form 1099-NEC (for contractors, if misclassified):
Filed for non-employees who were paid $600 or more.
Due to recipients and IRS: January 31
State Payroll Filings (California Example):
DE 9 and DE 9C (Quarterly Contribution Return and Report of Wages):
Reports state income tax, unemployment insurance, and disability insurance.
Due: April 30, July 31, October 31, January 31
DE 34 (Report of New Employees): Must be filed within 20 days of hire.
Ongoing Filing Requirements:
Payroll tax deposits: Based on IRS deposit schedule (monthly or semiweekly)
New hire reporting: Required in all states, with deadlines varying by state.
Missing a deadline can result in penalties, interest, or audit risk. Using payroll software or working with a payroll provider can help ensure filings are submitted accurately and on time.
Most common myths about payroll periods
Myth: All businesses must use a weekly payroll schedule.
Reality: This is false. The IRS does not require a specific payroll frequency. You can choose a schedule - weekly, biweekly, semimonthly, or monthly - that fits your cash flow and administrative capacity.
Myth: Biweekly and semimonthly payroll are basically the same.
Reality: While they sound similar, they are not. Biweekly means every two weeks (26 paychecks/year), while semimonthly means twice per month (24 paychecks/year). This difference affects how you calculate hours, especially for hourly workers, and can create confusion for accounting and benefit deductions.
Myth: Once you pick a payroll period, you can never change it.
Reality: You are allowed to change your payroll frequency, but you must do so carefully and follow both IRS and state rules. You need to notify your employees in writing, update your payroll system, and adjust your tax deposit schedules accordingly.
Myth: Monthly payroll is the cheapest and easiest.
Reality: It may be cheaper to run payroll less often, but monthly schedules often result in employee dissatisfaction, cash flow challenges for workers, and higher error rates with time tracking. In industries with hourly labor, it can also lead to compliance issues.
Myth: Payroll software automatically handles everything, so I do not need to understand payroll periods.
Reality: Software helps, but it is only as accurate as the information you provide. You still need to set the correct payroll frequency, enter pay dates and hours, review deadlines, and ensure that tax deposits and filings are made correctly. Relying blindly on automation can lead to costly mistakes.
(FAQ) Frequently asked questions about payroll periods
Question: Can I pay different employees on different payroll schedules?
Answer: Yes, but it can create complications. While the IRS does not forbid multiple payroll schedules, it increases administrative workload and the risk of filing errors. Most small businesses benefit from using one consistent schedule across all employees.
Question: What happens if a payday falls on a weekend or holiday?
Answer: If a scheduled pay date falls on a non-business day, you must issue payment on the nearest previous business day. This shift also affects your payroll tax deposit due date, which is based on the actual pay date—not the end of the payroll period.
Question: Is there a “best” payroll period for tax purposes?
Answer: There is no one-size-fits-all answer. Biweekly payroll is commonly preferred because it balances employee needs with manageable administrative frequency, but the best payroll period depends on your business size, cash flow, and workforce.
Question: Do I have to report payroll to the IRS every time I run payroll?
Answer: No, not every time. You report payroll quarterly using Form 941 and make regular tax deposits according to your assigned deposit schedule (monthly or semiweekly). However, each payroll run still needs accurate records in case of audit or review.
Question: Can I switch from paying contractors to employees without setting up payroll?
Answer: No. Once you reclassify a worker as an employee, you are required to set up payroll, withhold taxes, pay employer contributions, and issue W-2s. Misclassification can result in penalties, back taxes, and interest, so it is essential to follow the rules.
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Final Thoughts
Choosing the right payroll period is more than just a preference. It shapes how you manage your team, meet deadlines, and handle tax responsibilities. The wrong payroll schedule can lead to rushed filings, cash flow strain, and unhappy employees, while the right one helps streamline operations and keep you compliant.
If you are unsure which payroll period fits your business, or you are thinking about switching schedules, it may be time to talk to a tax professional or payroll expert. A little guidance now can prevent costly errors later.
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