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What Is a Payroll Period?

October 26th

A payroll period is very much what it sounds like: that is, a certain segment of time in which you normally pay your employees. Generally speaking, the vast majority of businesses tend to operate on a payroll period, at a frequency of twice a month. In the event that you do have a regular payroll period, you should be sure to withhold the income tax for the entire time period, even in the event that you have employees that do not work the entirety of that full period in order to stay in compliance with tax law. This helps protect you against any sudden increases in taxes that you may not have been expecting, due to the fact that the employee did not work a full scale of the payroll period.  Keeping track of the payroll period is essential when it comes to keeping out of tax debt.

Irregular Payroll Periods

There are businesses that do not subscribe to regular payroll periods. If this is the case for your business, you should withhold taxes as if you paid wages for a daily or miscellaneous payroll period. Figure out the number of days, which should include Sundays and holidays in the period that is covered by the wage payment. In the event that wages are unrelated to a specific length of time, such as a salesperson working on commission, you should count back the number of days from the payment period to January 1 of the same year.

Generally speaking, it is easiest for you and your business to keep out of tax debt if you attempt to keep your payroll periods more regular than not. If you subscribe to an irregular payroll period, it requires extra bookkeeping and generally is a headache that most employers would prefer to avoid. If you can keep your payroll periods regular, you will have a much easier time figuring out wages based off of these regular increments.


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