November 30, 2023
#Business #Finance

Guide to Biweekly Pay Schedules

Biweekly Pay Schedules - Stubsondemand

Payroll must be processed when you have employees so that they can get paid. Confusion might abound when selecting a payment schedule. Your decision should be in line with your organization’s budget, the HR department or administrator, and, of course, the employee. In addition, you must adhere to all applicable state laws.

What is Biweekly Pay?

Biweekly is the most popular choice for a business’s payment period in the U.S. Employees who receive biweekly pay are paid on a specified day of the week every other week. For instance, you might decide to pay your staff every other Saturday if you wish to set up a biweekly pay schedule. There are 26 paychecks altogether per year because there are 52 weeks in a calendar year.

What are the advantages of Biweekly Pay?

Biweekly pay, characterized by payments every other week, offers distinct advantages for both employers and employees. Employers benefit from reduced per-check costs, increased employee engagement, streamlined payroll processing, and simplified overtime calculations. HR departments save time, minimize payroll errors, and may even reduce costs with fewer frequent payroll runs. Paying employees biweekly benefits both HR and the employees.

Employers benefit from biweekly pay because:

  • Compared to paying every two months, you must pay less per check.
  • Your employees are frequently paid. This supports sustaining employee engagement, fostering a strong work ethic, and boosting productivity at the office.
  • Shorten the time spent processing payroll. With hourly workers, you merely need to pay based on how many hours they put in over the previous two weeks.
  • Calculating overtime work is less difficult. Simply increase the payout by the number of overtime hours worked.
  • Since they get paid on the same day every other week, they can budget their money more simply.
  • A fixed payday gives you more security than a pay date, which might fall any day of the week (as with semi-monthly paychecks).

Read: Semi-monthly vs Bi-weekly pay periods: Differences and Advantages

Industries such as health and education services, entertainment and hospitality, and information technology demonstrate a preference for biweekly pay, with over 36% of American companies adopting this schedule, according to the Department of Labor.

Biweekly pay schedules benefits HR:

  • Save time and lessen the likelihood that payroll mistakes will be made (compared to weekly payroll processing).
  • Since overtime compensation is based on a weekly basis, it is simpler to calculate than semi-monthly pay.
  • If your payroll provider charges you for each payroll run, save money (if you are going from a weekly payroll schedule).

Which Industries prefer Biweekly Pay?

More than 36% of American companies pay their staff on a bimonthly basis. These are the three sectors that use biweekly pay the most, per the Department of Labor (DOL):

  • Health and educational services
  • Escapism and hosting
  • Information

Check your state’s payday requirements from the DOL before making any decisions regarding how frequently you pay employees because certain states demand more regular pay intervals.

How is Biweekly different from Semi-Monthly payrolls?

The frequency of pay dates is the primary distinction between biweekly and semi-monthly compensation. Every other week is a biweekly pay date, and there are two specified dates each month when semi-monthly pay is distributed (e.g., every 20th and 5th of the month).

Other notable variations include:

  • Weekly Payment
  • Every year, there are 26 pay periods.
  • On a certain day, such as every other Friday, employees are paid.
  • Every two weeks, you are paid.
  • Calculating overtime is simpler.
  • The additional pay periods could result in increased payroll costs and more challenging bookkeeping.
  • Monthly payment
  • Every year, there are 24 pay periods.
  • On particular days, such as the fifth and twentieth, employees get paid.
  • Payment is made twice a month.

Computing overtime can be comparatively complicated if the extra hours happen between different semi-monthly pay times.

Are there any drawbacks to Biweekly Pay?

Businesses that employ a mixture of hourly and salaried workers are especially well-suited to a biweekly pay period. However, it’s advantageous for any business to take all factors into account before choosing a payment plan.

Two months in a year have three pay periods, so bookkeeping can be challenging. These three-period months must be accounted for in the company budget. If the payroll service provider charges by the payroll run, costs could be greater.

Does Biweekly Pay Affect Taxes?

The length of an employee’s pay period has no bearing on their tax obligations. Instead of considering how often you get paid, the total amount of tax you owe is determined by your annual income. Payroll taxes paid by the employer are the same.

Weekly, bimonthly, and monthly pay periods will each have different taxes deducted from each paycheck, but the total amount is always the same.

How can Biweekly Pay be Calculated?

Multiplying the number of hours worked over two weeks by the hourly rate yields the employee’s bimonthly salary. Simply divide the total payment by the total hours worked to determine an employee’s hourly rate based on their gross pay.

Pay for salaried workers is sometimes determined by a specified annual sum. Since the gross annual pay will be divided by 26 paychecks (50,000/26 = 1,923.08), an employee who receives a fixed salary of 50,000 dollars will receive a paycheck of about $1,923.08 biweekly.

For instance, a worker earning $2,000 over two weeks and putting in 80 hours would earn $25 per hour ($2,000 x 80 = $25).

Final Words

The choice between biweekly and other pay schedules should align with organizational budget considerations, HR preferences, and compliance with state laws.

Providing a practical approach to calculating biweekly pay, the guide offers insights for both hourly and salaried workers. It emphasizes the simplicity of calculating hourly rates based on gross pay and provides an example for determining the biweekly salary of a salaried employee.

In essence, the guide aims to assist businesses in making informed decisions about biweekly pay schedules, considering the financial implications, industry trends, and the needs of both employers and employees.

Guide to Biweekly Pay Schedules

Guide to Pay Frequency: How Frequently Do