Pay Period vs. Check Date
In this article
- Pay Period vs. Check Date
- Should I set a pay date & pay period schedule
- Why is my pay period calendar off
- Should I issue payments to employees on the last day of the pay period
- Which should I use when reporting wages to the IRS, State, or for a WC audit
Pay Period vs. Check Date
- Pay Period dates show the period of time over which employees worked & accrued earnings.
- Check Date is the date on which employees are paid; pay day.
Should I set a pay date & pay period schedule?
Yes, Colorado labor laws have specific regulations concerning the posting of pay dates for employees, timing of pay dates vs. pay schedules, and regarding furnishing of pay statements to employees. We advise you put this in writing and in an employee handbook that is given to each employee.
Why is my pay period calendar off; I pay my employees bi-monthly, every two weeks/twice a month?
Most confusion with pay periods revolves around the difference between semi-monthly pay period schedules & bi-weekly pay schedules. Let's cover this by breaking it down : semi-monthly is when you issue payments twice a month (12 months x 2 = 24 pay periods/year) vs. bi-weekly is when you issue payments every two weeks (52 weeks in a year/2 = 26). Bi-monthly would be every other month; which wouldn't comply with Colorado labor laws requiring employers issue payments to their employees covering pay periods no greater than every 30 days or one calendar month.
Should I issue payments to employees on the last day of the pay period?
While you certainly could and we will follow your direction; we don't advise this for various reasons. Process wise you are setting yourself up for headaches as you will be scrambling on those days to gather time, enter/submit time, process payroll, print/pick-up payroll, monitor your cash flow and distribute physical checks. You won't be able to pay your employees by direct deposit due to ACH processing delays thus your regularly repeating process will be less efficient for you and your employees (more checks to reconcile/wasted time going to banks or worse cash checking facilities). On top of it the payments likely won't be 100% accurate as you likely will be forced to estimate their hours on that final day of the pay period or cut it off by one day. If those aren't reason enough, cash flow can be a problem for many a profitable businesses. If your business relies on credit card processing for a large chunk of sales you will find yourself paying employees for hours worked even before the proceeds/revenue has posted to your bank account. For these reasons and others; you should consider setting up your pay period & check date schedules to give yourself a 4-7 day cushion. By the way, Colorado law stipulates that regular paydays must be no later than ten days following the close of each pay period, so you can't give yourself too big of a cushion.
Which should I use when reporting wages to the IRS, State or for a WC Audit?
All payroll tax returns (941's, UITR's, W2's) reflect wages based on Check Date rather than by pay periods. The same should apply to any requests made by an insurance auditor. As the auditor will attempt to tie the reported wages back against your 941's or UITR's to insure accuracy.