If you’re just starting a business and expecting to hire employees, you’ll soon tackle the challenge of payroll. Managing payroll is oftencompli ...
How Many Pay Periods Are in a Year?
Written by: Carolyn Young
Carolyn Young is a writer with over 25 years of experience in business in various roles, including bank management, marketing management, and business education.
Reviewed by: Daniel Eisner
Daniel Eisner is a payroll specialist with over a decade of practical experience in senior accounting positions.
Updated on October 2, 2023
How Many Pay Periods Are in a Year?
If you’re new to running a business you might still be figuring out the ins and outs of payroll, such as how many pay periods there are in a year. The answer to that question is that it varies, depending on the policy your business puts in place.
Luckily, this guide breaks it all down for you, so you can get on with growing your business.
What Is a Pay Period?
A pay period is the period of time during which a business tracks hourly employees’ working hours, which are then paid once the period ends. You can set your pay periods to any time length as long as they comply with state laws. You can pay employees more frequently than the law requires, but not less frequently.
Your pay period also factors into calculating overtime pay. Federal law under the Fair Labor Standards Act (FLSA) states that overtime applies to any employee who works more than 40 hours in any work week as defined within the pay period.
If the pay period is from Monday to the second Sunday after, for instance, a single work week runs from Monday through Sunday. Thus, if an employee works more than 40 hours in either Monday through Sunday period, they receive overtime pay.
Most states require that employees receive at least semi-monthly pay, while most US employees, according to the Bureau of Labor Statistics (BLS), are paid bi-weekly. What’s the difference between the two periods? Read on for all the details.
So, How Many Pay Periods Are in a Year?
The number of pay periods in a year depends on the pay schedule you choose. If you decide to pay:
- Weekly, your company will have 52 annual pay periods;
- Bi-weekly (every other week), you’ll have 26 pay periods;
- Bi-monthly (twice a month), you’ll have 24 annual pay periods;
- Monthly pay period, you’ll have 12 pay periods in a year.
Leap Years, as usual, throw a wrench in the works. You’ll likely end up with 53 pay periods if you pay weekly, and 27 if you pay bi-weekly.
How to Determine What Your Pay Period Should Be
As long as you’re in accordance with state law, your business’s choice of pay period is up to you. You might want to decide based on how often your business takes in revenue, but also keep your employees in mind. No one wants to go without a paycheck for too long.
If you want to accommodate your employees, and your revenue streams can support it, consider weekly. Keep in mind that anything less frequent than bi-weekly may keep some candidates from accepting a job with your company.
Pay Period vs. Pay Date
The pay period is the period in which you calculate hours. The pay date is the date on which employees receive their pay (most employers coordinate their payment schedule so that employees who receive direct deposit and employees who receive paper checks get their pay on the same day).
There’s often a slight delay between the end of the pay period and the pay date. For example, your pay period may end on a Sunday, but your staff might not receive their pay until the following Friday. You should aim to have the shortest time frame possible between the end of the pay period and the pay date so that employees receive prompt compensation.