Expert: Vanessa D. Powell, CPA - 9/22/2009

Question
Hi Vanessa,

I wanted to know which is best. I generally let new employees wait a week and a whole before they are paid their first paycheck. Once I run the payroll should I just pay them for all three weeks or should I hold back a timesheet?, meaning they will always be in the whole one timesheet. I sometimes don't know if I am doing this correctly or not. Could you tell me the best way to handle this?


Thanks in advance,
Anita

Answer
The standard way to handle this is the pay all employees (including new ones) one week behind.  So, for new employees, they won't get their paycheck for 3 weeks, and when they do get their first paycheck, it will be for their first 2 weeks of work.  Then, two weeks later, the paycheck will be for the period ending one week earlier.  If, instead, you pay weekly, it works the same way.  This week's paycheck on Friday (for example) is the pay for the pay period ending last week.  Next Friday, it will be the paycheck for the hours worked during the this week.

You can, of course, pay a couple of days after the end of a pay period (rather than waiting an entire week), but most companies and small businesses pay their employees in arrears by about a week.

I hope that answers your question.  Please let me know if I've misunderstood.

Best of luck!