Breaking News

How to Create a Biweekly Pay Schedule

How to Create a Biweekly Pay Schedule

A biweekly payment schedule is the most common payment frequency. Here’s how your small business can implement it.

  • The biweekly salary describes the payslips that arrive every two weeks, resulting in 26 payslips per year.
  • The biweekly payment is different from the biweekly payment, which is issued twice a month and 24 times a year.
  • Whether or not you should use biweekly pay varies based on many factors, but payroll software is always the best way to implement it.
  • This article is for small business owners interested in setting up a biweekly payment plan.

mediaindonesia.net– Think back to when you were an employee rather than a small business owner. As you scrambled through your homework, you may have occasionally reminded yourself that it was worth getting paid every other week. This last part is essential: every two weeks. Many small businesses pay their employees every two weeks, with a biweekly pay plan. Read on to find out how to implement and manage this program for your business.

What is a biweekly payment plan?

A bi-weekly compensation plan is the payment of employee salaries every two weeks, often on Fridays. For example, if your employees received their paychecks on Friday 8 October and Friday 3 October in October 2021. 22, you paid them biweekly.

There are four weeks in a month, so bi-weekly pay schedules theoretically translate to two employee paychecks per month. In fact, biweekly pay plans may occasionally involve three employee paychecks per month. If your first payday of the month was December 1st instead of December 1st. 8, your biweekly paydays would be December 1st, 15th and 29th. That’s three paychecks in a month with a biweekly pay schedule.

What is the difference between bi-weekly and bi-monthly payment plans?

Bi-weekly payment schedules can easily be confused with another popular payment schedule: biweekly. The bi-weekly payment is often referred to as “bi-monthly”, although this is not technically correct. As you can see from the definition of “biweekly”, “bi-monthly” would mean every two months, while bimonthly means twice a month.

Because biweekly pay means twice a month paychecks, and biweekly pay schedules often translate to two paychecks a month, these payslips can look the same. However, as the example above shows, biweekly and biweekly are not the same thing. They differ in these three key ways:

  1. Bi-weekly payment schedules result in paychecks every two weeks, almost always on the same day of the week. Bi-weekly payment schedules involve two payments per month, not necessarily on the same day of the week. Let’s say you pay your employees every two weeks on the 15th and 30th of the month, which means you might end up paying them on Wednesdays and Thursdays.
  2. Biweekly pay schedules can involve three employee payslips in certain months. However, bi-weekly pay programs always involve two employee paychecks per month.
  3. Since there are 52 weeks in a year, biweekly pay means 26 employee paychecks per year. Since there are 12 months in a year, biweekly pay means 24 employee payslips per year. As a result, biweekly checks may contain a slightly lower amount of salary than biweekly checks.

Are bi-weekly pay plans better for hourly or salaried employees?

You may be wondering if biweekly pay schedules are appropriate for both hourly and salaried employees. Most payroll and human resources experts would agree that biweekly pay is an excellent option for salaried employees. Opinions may differ as to whether biweekly frequency is appropriate for hourly employees.

Some experts argue that weekly pay plans help hourly employees keep track of the number of overtime hours they have worked in a week. These experts might also say that weekly pay is better for low-wage employees, as low wages paid every two weeks can be a drain on cash flow. With weekly access to cash, low-wage employees will find it easier to pay their bills and avoid heavy late payment penalties.

Other experts, however, would say that bi-weekly pay programs should remain your choice for your hourly employees because it’s easier for your business to track.

How is biweekly wages calculated for hourly and salaried employees?

Biweekly pay calculations are generally easy for both hourly and salaried employees. Even if they are difficult, your payroll software automates them for you. Follow these steps to calculate biweekly pay for hourly employees:

  1. Extract the total hours worked by the employee during the biweekly pay period from timesheets or from the clock.
  2. Make sure you include hours of paid vacation or other paid vacation.
  3. Add this time to the hours worked by your employee during the pay period.
  4. Multiply this sum by the employee’s hourly wages.
  5. The result is your employee’s gross salary for the period. Be sure to deduct withholding taxes to get the employee’s take-home pay.This number is what you will ultimately pay the employee.

How is the biweekly compensation of employees calculated?

Follow these three steps to calculate biweekly pay for salaried employees:

  1. Check your payroll software to confirm the employee’s salary.
  2. Since there are 26 biweekly pay periods in a year, divide this salary by 26.
  3. The result is the employee’s gross salary for this paycheck. After deductions, you will be left with the net payment, which is what you actually pay.

Which industries and business sizes use which payment programs?

The U.S. Bureau of Labor Statistics (BLS) found that as of February 2020, 43% of companies were paying their employees every two weeks. This figure makes biweekly payment the most popular option across industries.

The BLS found that employers in construction, commerce and manufacturing often pay weekly. In fact, across all sectors, 33% of companies pay weekly. The biweekly payment is the preferred program by 19% of companies and is almost as common as the biweekly payment in the financial sector. Some financial, professional, educational, health, and leisure services pay monthly, but this is the least common payment program, with only 4.7% of companies using this option.

The size of the organization may be more closely related to the payment scheduling options. BLS data from February 2020 shows that the prevalence of biweekly pay increases with the number of employees in an enterprise. Interestingly, however, 34.9% of companies with fewer than 10 employees pay weekly compared to 33.7% who pay biweekly. Companies with 10 or more employees usually pay biweekly. Learn more about the different options regarding payroll frequency.

The pros and cons of paying twice a week

When a practice is popular with small businesses, it is likely quite beneficial to employers. This notion holds true with biweekly pay. However, it is not without imperfections. Here are some reasons why you might choose to pay your biweekly staff.

  • Predictability: When you choose biweekly pay, you know you need to manage paychecks every two weeks. Since biweekly payslips traditionally arrive on Fridays, you will also know that you are managing paychecks early enough to meet this Friday’s deadline. Your employees will also receive pay slips at regular and predictable intervals, which can help them plan their budget.
  • Easy overtime calculations: It’s true that bi-weekly payment schedules could make overtime calculations more challenging than weekly pay. However, compared to biweekly pay, biweekly pay makes overtime a breeze. You just need to check an employee’s overtime for two consecutive working weeks and then take it into account in your calculations. Biweekly pay periods can divide working weeks into two different pay cycles, making it difficult to calculate overtime.
  • More employee salaries: For employees, biweekly pay programs translate into more salaries per year than biweekly programs. The result is stronger cash flow – great for paying bills, buying groceries, and saving for retirement. When you choose biweekly pay, you will likely make your employees happier than biweekly pay.

Some employers may choose other pay schedules due to the following disadvantages of biweekly pay.

  • Variable Payment Dates: Sure, biweekly pay translates to paychecks every two Fridays, but that doesn’t automatically date paychecks. Biweekly pay means receipt of pay on the 15th and 30th, although these dates must be changed if they fall on a weekend or public holiday. Even with this need, you may still find these dates easier to plan when running payroll.
  • More staff costs: As employee cash flow increases from biweekly pay programs, more costs may arise for you. This is because with some payroll services, you will pay commissions every time you run your payroll. If your payroll service charges these fees, you may be inclined to opt for bi-weekly or monthly payment plans. This way you manage payslips from 2 to 14 times less than paying twice a week and reduce costs.
  • Complicated deduction calculations: During the months when the biweekly payment results in three payslips, splitting the monthly deductions between these checks can be difficult. You will have to divide the total monthly deduction by three, not two, and this is easy to forget. Instead, bi-weekly and monthly payment schedules result in predictable and consistent deductions per paycheck, saving stress and reducing the potential for human error.

What are the best solutions to implement a biweekly payment schedule?

In general, the best way to start paying employees every two weeks is through payroll software. Setting up a biweekly payroll schedule on these platforms is generally easy. You will log into your account, go to the payroll interface and find an option to add a payment schedule. You can then indicate which of your employees you will pay in this program. Assuming you pay all of your employees every two weeks, you can apply this program to all of your staff.

However, some employers may pay some employees every two weeks and others weekly. For example, you could pay your hourly employees weekly and your salaried employees biweekly. This approach is far from unheard of and helps employees with lower hourly wages increase cash flow. It does this by minimizing the potential costs of making even weekly payments for salaried employees, who can often wait longer to receive salaries as they tend to be higher.

Either way, payroll software is the simplest way to run a biweekly payroll program. This notion is especially true if you choose software that allows you to run payroll an unlimited number of times at no additional cost. In our OnPay review, we found that the company never charges fees when you manage your payroll, no matter how many times you do it. As you search for payroll software, you will almost certainly find an affordable and affordable option to get started and keep your biweekly pay.

Check Also

How to Write a Debt Collection Letter

How to Write a Debt Collection Letter

This guide includes information about how to write a debt collection letter and pursue outstanding …

Leave a Reply

Your email address will not be published.