Pay Stub Deduction Code: Definiton, Existence, Kinds, Benefits and Limitations

Whether operating as a worker, employee, or independent contractor, specific terms are helpful to understand. Some of them include pay periods, check dates, and pay dates. Because when working in any business, an owner must be able to set up a payroll system that can accurately calculate and pay the workers while being able to explain the payment process to the entire staff.


In addition, having a paystub creator will help you manage and efficiently keep track of everything from employee payroll to taxes and holiday pay. All while saving you money and avoiding mistakes.


Understanding Definitions Of Different Forms Of Pay


You will receive your pay depending on your chosen method, through a contract, or on the company itself. In business, different ways to obtain your payment vary depending on the total amount received. This is why it’s essential to know the terms before signing any paperwork and for your employer to be transparent with future workers.


1)   Pay Period


A pay period is the time frame used to calculate the earned wages of an employee and when they will receive it. Pay periods are fixed. They can occur every week, bi-weekly, or monthly.


H.R. (Human resources) recommends leaving at least five days between the end of the pay period and the pay date. Preparing payment this way allows payrolls to be accurately designed.


2)   Pay Date


The employees do not receive their pay right when the pay period ends but a few days after. The day they receive their money is called the pay date.


In the U.S., the requirements for the pay date are governed by the state and not the FLSA. For instance, Massachusetts employees must be paid within six days after the pay period has ended.  


3)   Check Date


The check date is written on the check. This ensures the money can only be transferred once the date passes.


4)   Salary


Salary is when an employee gets the same amount each pay date, regardless of how much they worked.


What types of employees earn a salary?


Most salary-earned workers have a full-time role in a company. Some examples of salary-paid employees are:


  •   Accountants and financial advisors


  •   Engineers and software developers


  •   Managers (in business, sales, retail, and restaurants)


  •   Business professionals (marketing, communications, and operations)


  •   Education professionals (librarians, teachers, and professors)


5)   Wages


Wages are paid hourly. Employers pay their workers depending on how much time they put in during their pay period.


What types of employees earn a wage?


Employees usually use the wage system to pay part-time workers and seasonal staff. Some common examples of wage workers include:


  •   Bartenders


  •   Repair and maintenance workers


  •   Restaurant waitstaff


  •   Mechanics and technicians

How are pay periods determined?


Organizations select the pay periods structures that would best fit the needs of the employees, labor laws, the best outcome for the company, and other factors.


Businesses can choose different pay periods for different types of employees. The only condition is that the payment has to be consistent during the pay dates, whether daily, weekly, or even monthly.


Types of pay periods


Within the confines of the law, businesses have tremendous flexibility in choosing their pay periods. Yet, different pay periods provide various benefits and downsides. Here are some examples of varying pay periods and their pros and cons:

1)   Daily


Historically, most businesses did not opt for this type of pay period because of its complexity. Here, you pay your employees every day.



A daily pay can be costly and complicated to implement and administer. This method includes calculating income, withholding tax, and processing payments every twenty-four hours. However, some pay apps make daily payments much quicker and less time-consuming. One example would be a paystub creator.



Some employees wish to access their pay daily. Paying daily can boost employee satisfaction and mitigate financial stress, i.e., bills and emergency expenses.


2)   Weekly


Payments are given after a week of working. The U.S. Bureau of Labor Statistics reports that over one-third of worksites and establishments have a weekly pay period.



Administering weekly payroll can be both time-consuming and expensive. This can be particularly evident when the payroll administration of a company relies on third-party vendors, causing a rise in costs since these vendors may charge fees every time they process payroll. When implementing a weekly system, the company must also consider the frequency of ensuring proper tax withholdings, accounting for paid time off and holidays, and benefits administration. HRMS (human resource management system) can help you manage HR-related functions like payroll processing. It’s a good idea to process payroll weekly because you will not be subjected to fees for each pay period.



Hourly employees often prefer to be paid weekly. Additionally, when a weekly pay period is aligned with a workweek, it is easier to comply with FLSA overtime pay laws. Moreover, seasonal employees and wage workers that rely mainly on tips would find a weekly pay period more alluring since it can encourage more engagement and increase retention in roles that can experience high turnover.

3)   Bi-weekly


Bi-weekly is the most common length of a paid period in America. This method gives their employees pay every other week.



Bi-weekly pay periods have some complexities in tracking and projecting cash flow. This is because certain months have three pay periods instead of two.



Bi-weekly is a consistent way for employees to receive their salary/ wages. This consistently is very appealing to workers.

4)   Semi-monthly


Pay dates come twice a month, typically on the 1st and 15th or the 15th and last day of the month. If the date occurs on the weekend, the playdate typically falls on the Friday before.



Worksheets may overlap pay periods, which will cause issues in FLSA compliances, making it more difficult to calculate overtime.



Since payrolls run on the same date each month, it can be easier to adapt to leap years and odd-numbered months. This structure gives some flexibility to salary employees in overall budgeting because payrolls are consistent and only paid twice a month.


5)   Monthly


Both salary-based employees and wage workers are paid every month. In addition to monthly payments, it's common to have bi-weekly and semi-monthly pay periods in the labor market.



This type of pay period is a bit complex to administrate with hourly waged and nonexempt employees—additionally, employee payments are different depending on which state you’re working in.



This payment plan is easier to administer when dealing with tax withholding, benefits, and budgeting. Monthly paid periods simplify budgeting for future positions, investments, or enjoyments.



 When entering the business field, knowing some basic information when dealing with payments will help guide you in the right direction and give you a better understanding to help you whether you work as an employee or an employer. Knowing the basic concepts and terms of payments will guide you in choosing a payment plan that works best for you and your employees.