Once you're past the legal basics that you've already discovered, payroll frequency and payday is a matter of employee, employer convenience and cost. Here's some issues to consider:
(1) The labor and hassle of preparing, processing, and posting payroll is significant. In addition, some payroll processors charge per payroll run. Taken together, running 12 monthly payrolls will cost you significantly less than running 52 weekly payrolls.
(2) In an effort to mediate the significant bother and costs of processing/receiving payroll, a majority of small businesses use some form of twice monthly payroll (Biweekly or semi-monthly).
(3) Biweekly (every other week) payroll makes employee overtime calculations easy as you do not have to look at the prior period to calculate weekly overtime. However, biweekly means you'll run 1-2 more payrolls annually when compared to the 24 periods when running semi-monthly payroll.
(4) Semi-monthly (twice a month) payroll means fewer runs but requires more effort in calculating weekly overtime unless you automate your timecards. Our business is employee time and attendance management and our Virtual TimeClock software makes managing employee timecards super simple. (Whenever I mention Virtual TimeClock, I offer a 50% discount to OnStartups members just so you know this isn't a completely shameless plug for our products. Contact me if I can help you).
(5) Do yourself a huge favor and automate your payroll. Intuit Online Payroll is very good and costs about $39 per month (about $25 if you're a CostCo member). Using an online payroll service makes it dead simple to manage electronic tax filings, tax payments, payroll deductions, and employee direct deposit. It's perfect for the busy small business owner. If you want other payroll options, we maintain a list of the most popular payroll processors on our web site.