Quite simply, a paycheck is money for work given to an employer. Most companies pay their employees bi-weekly or monthly. A common practice is to pay your employees every other Friday or end the pay period on the 1st and 15th of each month. For most companies, there is a 7-10 day span between the end of the pay period and the paycheck issue date. A person on salary can expect to receive the same paycheck amount each month, no matter how many hours they work.

Some companies like Staples prefer to issue weekly paychecks to their employees. This type of pay has its advantages and disadvantages. A weekly paycheck means the employer must calculate the payroll on a weekly basis and if you are in charge of all the calculations, it could take a lot of time to do. Workers who are paid by the hour usually have variance in their pay. The employees may like being paid on a weekly basis, but studies have shown that employees who are paid on a weekly basis tend to spend more of their money and they do not use proper budgeting procedures.

An employee who is paid every 2 weeks generally has a good budgeting system and they do not over-spend their income. Many employers prefer the bi-weekly pay system because it is less expensive to calculate payroll and process check than it is every week. The employees who are paid bi-weekly will get a special advantage of having 3 months where they get a 3-paycheck month. The 3-paycheck month is a great time to save money and catch up on expenditures.

The other bi-weekly pay period is the pay period that ends on the 1st and the 15th. With this type of pay system, your paycheck will never be consistent (unless you are salaried) because there will be more or less days worked on a paycheck than usual. The paycheck you receive in February will be smaller than the one you receive in January or March. Some companies prefer to pay their employees on a monthly pay period. This is a hard pay structure to follow for many employees who cannot budget their money well. If you are paid on a monthly basis, you need to train yourself to be paid on a monthly basis.

There is even a yearly pay period, but it is very rare. Commission based workers can be those who are paid on a yearly basis. Other commission based workers are paid on a daily or monthly pay period. Construction workers are among those who are considered a freelance worker and they are paid at the end of each day.

Independent business owners can set up their own pay structure. Some business owners need to pay themselves on a bi-weekly basis, while others can go 2 months without a paycheck. Freelance workers typically are those who get paid upon completion of their work. A freelance worker generally is paid per job or per item versus per hour or per week.

 When you are establishing your paychecks, you need to remember paid holidays. The legal paid holidays are: New Year's Day, Civil Right's Day, President's Day, Memorial Day, Independence Day, Labor Day, Veteran's Day, Thanksgiving, and Christmas Day. Your state may have state holidays and you have the option of giving your employee's paid leave on those days.

Paychecks also need to include any sick or vacation leave an employee takes. A staff member generally can take their sick or vacation leave once it is accrued. Some companies set regulation on sick and vacation leave, stating you must wait a month or longer before you can use your leave. If your company offers bereavement leave, you need to include this in a paycheck if your employee uses it.

It is a requirement to fill out a W-4 form when a new employee is hired. The exemptions an employee claims on a W-4 form will help you calculate the correct withholdings on their paycheck. An employee can update their withholding information once a year and it is the responsibility of the employer to inform their employees when their W-4 is about to expire.

Many companies prefer to outsource their payroll to handle all of the paychecks. Third-party companies will take care of all your payroll needs. They will calculate the weekly, bi-weekly, monthly, or yearly paycheck amount. Once the payroll is ready, the payroll company will notify you via email so you can log on and view all of the paychecks to make sure they are correct. Once you have approved the paychecks, the company will automatically mail or deposit the funds into your employee's accounts. Most payroll companies allow employees to log in and check on their paycheck amount and previous paychecks.

If your company handles the paychecks internally, you should consider securing a database with the paychecks and allow employees to access them whenever they need. Large firms have their own web site with secured information for their employees to view, print, or download. Posting the paycheck on your secured online web site is a great service to your employees. It will also benefit your accounting or human resources department since they won't need to pull up old pay stubs for employees who need them to purchase a home or for other reasons.

Understanding Your Paycheck Once you obtain your paycheck, you will notice there are many deductions taken out of your gross pay. You need to understand everything that is being taken out of your paycheck. Some companies offer insurance and retirement benefits that are taken directly out of your paycheck. You should always discuss your questions about your paycheck with the accounting or human resources department.

Everyone will have taxes taken out. You will have taxes for the local, state, and federal government and for Social Security, Medicare, and Unemployment. Remember that if you get a raise, you will pay more in taxes. Your employer is required to match the amount taken out of your paycheck and pay that to the correct tax agency. On top of your taxes, you will have money taken out of your paycheck if you are receiving company benefits. Most employers will pay half of the benefits and the employee will be responsible to pay the other half. Health insurance will probably be the largest amount you pay for benefits.  

 When you get your paycheck, it will include a paystub that breaks down all the deductions and credits. Your paystub should include the gross amount (the amount you are paid before taxes) and it should be equal to your hourly rate or salary rate that you were quoted when you were hired. Next to the regular pay section, there should be a section that discusses the overtime, holiday or sick pay you received. For most people it will show the number of hours you have accrued and the number of hours you have cashed in. If you worked overtime, be sure to check this amount and make sure you are getting paid for time and a half. Now that you have your gross pay in order, you will see information about your taxes.

There will be information for your federal taxes and state taxes. You will have taxes for Social Security, Medicare, and Social Security. It may be labeled at "FICA" on your paystub; it depends upon your employer. The money that you as an employee pay to Medicare and Social Security is matched by your employer. The paystub will have other sections that will include things such as health insurance, retirement plans, and cafeteria plans.

When you start receiving your paycheck, you need to take steps to manage the money you receive. With a faltering economy, it can be hard to save money and avoid living paycheck to paycheck. There are budgeting strategies you can do that will help you save money and avoid losing your home in a time of economic struggle. As you set up your direct deposit with your employer, set up two different accounts for the funds to be deposited. Send 10%-20% to a separate savings account and the rest to your checking or expenditures account. Make an effort to avoid using the money that is transferred into the savings account so it will become a nice "nest egg" for you.

The money you are contributing to your retirement account could be wrong or you could be contributing to the wrong account. Check with your financial advisor about where your retirement account money is being invested and what you can do to maximize the amount that is being saved. It is your responsibility to check your paycheck and make sure everything is being done correctly and if you aren't spending the right amount of money on your retirement, inform the payroll department as soon as possible.

Your paycheck is the single-most important thing you receive. The money you earn on your paycheck is how you survive; take the time to educate yourself about your paycheck so you can make sure you can live a stable, financial life.