- Payday/PayCheck Date is the date printed on the paycheck.
- Pay Cycle is how often the company pays the employees.
- Pay Period is the time period the employee worked for the company that earned the paycheck.
Payday/Check Date – Important For Payroll Tax Deposit & Filing
An important small business payroll concept is understanding that “Payday/Paycheck Date” determines the payroll tax deposit and tax filing deadlines. If there is no paycheck (company did not pay an employee) then there is no business employee payroll taxes and there is no employee tax filing deadline. However, if even one employee paycheck is issued to a single employee, then all payroll tax deposits and tax return deadlines apply.
Pay Cycle – Important For Employees & Business Operations
“Pay Cycle” is how often a company pays its employees. “Pay Cycle” can be weekly, bi-weekly, monthly, daily, or any random time or frequency. It is within the company’s power to select any “Pay Cycle” to fit its business model, convenience, and/or satisfy its employees. “Pay Cycle” does not impact payroll deadlines directly. It is important only in that it often determines the date on the check
Therefore, “Pay Cycle” is not important for small business payroll tax deposit and filing.
It is not used in payroll tax calculations and it is not reported to any government payroll agency.
Pay Period – Important For Employees & Business Operations
“Pay Period” is the time period the employee worked for the company that earned the paycheck. “Pay Period” describes the term when the work was performed by the employee. For example, a roofer may perform work from June 1-31st, and then he gets a paycheck on July 1st. The “Pay Period” is June 1-31st while the “Paydate/Checkdate” is July 1st.
Why does small business payroll and HR need to know the difference between these terms?
The only important date is the employee “Payday/Paycheck Date”, while “Pay Period” and “Pay Cycle” have no significance or impact to the various business payroll deadlines. The date, “Payday/Paycheck Date”, on the employee paycheck determines the deadline for payroll tax deposits, based on the IRS defined deposit schedule (monthly, semi-weekly, etc.) and quarterly business employee payroll returns (quarterly 941, etc.).
Example 1:
For example, if an employee paycheck is issued with a check date of 7/1 for work performed in June. The payroll tax deposit is due to the IRS by 8/15 (monthly depositor). If the employee check date is 6/30 for the same work period in June, then the deadline for payroll tax deposit is 7/15. The small business payroll expense and taxes are reported in the 3rd quarter (July, Aug, Sep) using Federal 941 forms, even though the work was performed in June.
Example 2:
Consider an extreme example: an employee worked two years ago, but did not get paid at the time because the company did not have money to pay. Today, the company issues an employee paycheck for the worked that was performed two years prior. Payroll tax rates, tables, and regulations from today should be applied as well as all the employee payroll tax deposits and tax return deadlines. The date on the paycheck determines all the small business payroll tax deposit and filing deadline and is really the only date that matters.
Small business payroll process is not difficult, but it can be tedious. There are different payroll Federal taxes, State taxes, and different deadlines for making tax deposits and filing payrolls returns (941, 940, etc.). Many businesses, especially small businesses, have been penalized for filing or paying payroll taxes late.