Payroll Cycle

What is Payroll Cycle?

Payroll Cycle, Pay Cycle, Payroll Schedule, Payroll Period, or Payroll Calendar refers to the particular period that an employee works and gets paid. It schedule by which companies pay their employees and run payroll.

A payroll cycle covers all activities to run payroll e.g. clock in time, attendance data of employee, leave data of employee, calculating salary after deducting taxes, salary counting and payment, paying taxes to the Govt., making entries & tracking history.

Payroll cycles can vary depending on an organization’s payroll schedule or policy. Some companies prefer a monthly payroll cycle, while others may have a weekly or bi-weekly pay cycle. The length of the payroll cycle is usually determined by the frequency of payroll cycles.

There are 4 types of Payroll cycles-

1. Traditional payroll cycle– when the employer follows a regular pay schedule to pay out on a group date each month.
2. Off-cycle payroll cycle– when the employer pays their employees outside of their normal pay schedule.
3. Retroactive payroll cycle– when the employer pays for work wiped out in the past.
4. Ultimate payroll cycle– when the employer pays the employee after leaving the company.

Also, See: Payroll Journal Entry