GoCo recommends that you have a payroll schedule that's at least 5 days in arrears. That makes sure there's enough time to approve hours and send it to payroll for processing.
What does it mean to pay in arrears?
Paying in arrears means paying employees for work they performed prior to the current pay period. For example, you might pay on the Jul 30th for work performed from Jul 7th to Jul 21st.
Why is it important to pay in arrears for hourly employees?
Imagine a company that didn't pay in arrears. Employees at this company are paid on Jun 31 for work performed from Jul 16 to Jul 31. They need to run payroll a few business days before the pay date so they do it on Jul 27. The problem is, they won't know how much time their hourly employees worked from Jul 27 - Jul 30!
That's why with Time Tracking, GoCo recommends setting a payroll schedule that pays 5 days in arrears. That'll make sure employees' time sheets are approved before you run payroll.
Example: 5 days in arrears (Recommended)
- Pay period is from 1st - 15th of the month
- Pay period ends on the 15th
- Time sheets must be approved by the 16th
- Hours are submitted, and payroll is run
- Payday is on the 20th (5 days in arrears).
NOTE: If you have any questions or hesitations around setting up your payroll schedules correctly, please contact us. It's important your payroll schedule are set up correctly so your team is paid accurately and on time.