Payday is a regular day on which wages are paid. We can say it to be the date mentioned on a paycheck. Payday/ Check date is very important for filing income tax returns. For a small business to succeed, these details are very important as based on these the deadline for payroll tax filing and employee tax deposit. If you miss this date, you need to face penalties. If you don’t have a paycheck, you don’t need to worry about different taxes and other deadline but if you and your business generate even a single paycheck then you need to worry about all these taxes.
Pay Cycle is the periodic frequency at which company pays it, employees. It is a set of predefined guidelines which defines payment schedule used for payment creation. Pay cycle is the frequency at which the pay creation for an individual employee takes place. Pay cycle can be weekly, bi-weekly or monthly. Selection of the pay cycle completely depends on the organization depending on its structure, requirements, and convenience. This pay cycle should be fixed for an individual employee and should be agreeable to both the company and the employee. Payroll and taxation deadlines are not affected by the pay cycle. Pay cycle is only important in deciding the payday/ check date. So we can say that the pay cycle is not directly important for business payroll and tax deposit filing. Employees don’t need to use pay cycle in any tax return or don’t need to mention it to any of government officials.
A pay period is a repeating time span over which worker time is recorded and paid. A weekly pay period has around 52 paychecks in a year. A biweekly pay period has 26 paychecks in a year whereas semi-monthly has 24 paychecks in a year. Similarly, a monthly pay period has 12 paychecks in a year. Salaried employees are paid based on an annual amount, divided by the number of pay periods in the year. Pay period also describes time duration during which the employee served the company. For example, for an employee on a monthly basis, pay period can be considered as 1st – 31st of any month.
Importance of knowing the difference
So we can conclude that only important date for employer or employee is payday/paycheck date whereas pay cycle and pay period have no valid importance on business payroll deadlines. But one needs to be aware of paycheck date as once the paycheck date is mentioned, all your deadlines hang nearby.Tags: online pay stubs, pay cycle, pay period, Paycheck Date, Payday date