How to Budget for Weekly to Bi-Weekly Payroll
Payroll is a major expense for many companies. As such, properly budgeting for payroll is essential for the financial health of your business. You must pay wages in accordance with federal and state labor laws, but these laws only specify the minimum to pay employees. You, as the employer, decide how often your employees receive their pay. Paying weekly or bi-weekly ensures compliance with all state and federal regulations.
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Instructions
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Calculate the amount of money you want to allocate to payroll. Your payroll should typically be no more than 38 percent of your revenues, according to Second Wind Consultants. Multiply your gross revenues by the percentage you choose. For example, if the gross revenue of your business is $500,000 and you allocate 35 percent toward salary, multiply $500,000 by 0.35. Your gross salary expense should not exceed $175,000.
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Determine the number of pay periods in a year. If you pay weekly, your business has 52 pay periods. If you pay bi-weekly, your business has 24 pay periods.
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Divide your gross salary expense by the number of pay periods in a year. For example, divide $175,000 by 24 to calculate a bi-weekly payroll amount of $7,291.67.
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Tips & Warnings
Calculating the gross revenue per pay period ensures you remain in budget. For example, divide $500,000 by 24 to determine that your gross revenues should equal at least $20,833.33 bi-weekly to sustain your 35-percent payroll budget.
If your gross revenue goes down, you should decrease your payroll by cutting hours or lowering salaries to maintain your 35-percent allocation.
