How does Biweekly Payroll Work | Everything you need to do

Employers can use a variety of pay frequencies, with biweekly payroll being a popular choice. In this article, we will define biweekly payroll, answer “How does biweekly pay work?”, and explain what else you should know about it.

How does biweekly pay work?

Biweekly payroll divides the year into 26 distinct pay periods, paying you every two weeks rather than every week. Because there are 12 months in a year, there are always two months where three paychecks are distributed, while the other ten months each receive two.

If you are an hourly worker who is paid biweekly, your timecard will show the hours for the previous two weeks. If you are paid on a salary, you can calculate your biweekly pay by dividing your annual salary by 26. (the number of biweekly pay periods in a year.)

Subtract taxes, retirement contributions, insurance, and any other line items from your paycheck each pay period to get your final take-home pay.

Some employers allocate biweekly payroll calendars to their employees to help them understand the company’s payment system.

The calendar displays the year’s time card due dates, pay period start and end dates, and paydays. Use distinct symbols or color codes when creating the calendar.

Timecard due dates, for example, should be marked in blue, pay period start dates in yellow, pay period end dates in orange, and paydays in red. We hope this answers the question “how does biweekly pay work?”

Pros of Biweekly Pay

Compared to weekly pay periods, your HR team should process payroll every two weeks to reduce the likelihood of payroll errors and time spent on payroll processing.

Employees receive more paychecks throughout the year than they would on a semimonthly basis, even if those paychecks are slightly lower.

For example, employees benefit from a biweekly system because they can expect to receive a paycheck every other Friday.

The days of the week will vary with a semimonthly pay period, with an employee potentially receiving a paycheck on a Monday and then another on a Wednesday.

It is more likely to make your employees happy than operating on a monthly schedule, which requires employees to budget over a longer period.

As previously mentioned, an employer who pays most/all of their employees hourly may prefer this payment method.

This is because dividing payments by hours in the week rather than monthly makes it easier to calculate payments.

It can also help save time when calculating pay for hourly employees with fluctuating pay packets and irregular overtime.

Another advantage of biweekly pay is that there is less work to do at once, which reduces the possibility of making mistakes.

If payroll is only done once a month, it will take longer and be more complex, making it more vulnerable to human errors and mistakes. Each time, there is also less time spent processing payroll.

Cons of biweekly pay

If you use biweekly pay, your company must be prepared for months with three paychecks and budget accordingly to ensure the payroll account has enough money to cover those additional expenses.

Your payroll provider may charge your company for each payroll run, resulting in higher annual fees than if you choose semimonthly.

Your employees may prefer to be paid weekly to have more consistent money coming into their accounts.

Employees may appreciate weekly pay for a sense of security if your industry is based on contract work and projects can stall for extended periods.

Finally, when deciding on a pay period, it’s critical to consider what your competitors are doing and what makes the most sense for your employees.

The size of your HR team may influence your decision, the availability of a payroll provider with reasonable payroll fees, and whether your employees are salaried or hourly.

Some smaller businesses may handle their payroll, so they will likely choose the shortest, easiest, and most comprehensive pay cycle, which may be monthly if they do not want to spend time on it each week.

Another factor to consider is the software program or process that will issue the payments.

So, because some payroll programs charge per pay cycle, biweekly pay is more expensive for the company than monthly payments.

Furthermore, depending on the rhythm of their payment system, biweekly pay may make calculating overtime, holidays, and deductions more difficult for the employer.

When these factors are considered, the employer can make the best decision for them.

What is the number of biweekly pay periods in a year?

Under this pay schedule, employees will receive 26 paychecks in a year or 27 in a month. Because payday occurs every two weeks, some months will have three paychecks.

As a result, you must be prepared to pay your employees three times in a few months.

Pay Periods: Semi-Monthly vs. Biweekly

A biweekly payroll calendar requires you to pay your employees 26 times a year, or 27 times if the year is a leap year.

If you have a semi-monthly pay schedule, you must pay 24 times per year.

Biweekly pay may have a lower paycheck amount, but your employees will receive it on the same day every other week.

If you make Monday or Friday your payday, your employees will receive their paychecks on the same day every other week.

This allows them to plan their finances better, and they will be delighted to receive their paychecks on time, every time.

However, if you choose to pay your employees on the 15th and 30th of each month, paydays will fall on holidays or weekends.

As a result, you ensure payroll is processed and that your employees are paid on time.

Even though biweekly pay has more paydays than semi-monthly pay, you will pay your employees the same amount at the end of the year.

You can read this: The Best Business Payroll Services – Employee Payment made easy

How do you decide between biweekly and semimonthly payments for your company?

There are many benefits and drawbacks to both biweekly and semimonthly payroll cycles.

When deciding which payroll cycle is best for your company, you must consider several factors, including whether you pay many hourly employees or if your employees are mostly salaried.

If your payroll service charges you based on the number of payroll cycles, you process throughout the year, you’ll also want to decide whether you want to have more or fewer payroll cycles, which can affect the amount you pay for payroll services.

The followings are some advantages and disadvantages of biweekly and semimonthly payroll.

Pros of biweekly pay

• Throughout the year, there are consistent paydays.
• Over time, it’s easier to calculate.
• Processes in less time than weekly payroll.

Cons of biweekly pay

• Overtime is more difficult to calculate for hourly employees.
• There will be an additional cost if you are charged per pay run.
• Deductions can be more difficult to process.

Pros of semi-monthly pay

• Salaried employees can be paid more easily.
• If charged by pay run, it is possible to save money.
• Deductions are easier to manage.

Cons of semimonthly pay

• Payroll days that are inconsistent throughout the year make it more difficult to pay hourly employees.
• Weekends and holidays can impact pay dates.

Here are some specific factors to consider when deciding which payroll cycle is best for your company.

Employees who are paid hourly versus those who are paid on a salary. One of the most important factors to consider when deciding whether to pay employees biweekly or semimonthly is the number of hourly employees you currently need to pay.

Paying hourly employees biweekly, which corresponds to a 40-hour workweek, is much easier than paying them semimonthly, especially if your employees frequently work overtime. If most of your employees are paid hourly, biweekly may be the best option.

If they are salaried, semimonthly payments may be the best option.

Management of benefits

If you provide benefits to your employees, you must also manage those benefits properly, including ensuring that deductions are processed each pay cycle correctly.

While semimonthly payroll deductions are fairly simple, remember that biweekly payroll has two months with three payroll dates instead of two, making the deduction process a little more complicated.

You can remove deductions for the month’s final payroll during the three-payroll month or calculate the deduction total based on 26 pay periods rather than 24.

You have a choice, but don’t forget to adjust it, or you’ll be over-deducting from your employees’ paychecks, which will cause extra work and many unhappy employees.

Payroll expenses

While many payroll software and service providers provide an unlimited number of payroll runs, some payroll service providers charge per payroll run. Depending on the payroll cycle you select, this can impact the final cost of the service.

What Industries Make Use of Biweekly Pay? 

Over 36% of businesses in the United States pay their employees biweekly. The following are the three industries that most commonly use biweekly pay, according to the Department of Labor (DOL):

• Education and healthcare
• Recreation and Hospitality
• Information

Check your state’s payday requirements from the DOL before deciding about how frequently you pay employees, as some states require more frequent pay intervals.

Is biweekly pay tax-deductible?

The length of an employee’s pay period has no bearing on their tax liabilities. The total tax liability is calculated based on the total amount earned in a year rather than the frequency of paychecks. The same is true for payroll taxes paid by the employer.

The taxes deducted from each paycheck will differ for weekly, biweekly, and monthly pay periods, but the total amount will remain the same.

What months have 3 paychecks in 2023?

Based on when you received your first paycheck of the year, here is a glimpse at when your three paycheck months will be.

You’d get three paychecks between March and September if you got your first one of 2023 on January 6th. Pay dates for March are March 3, 17, and 31.

Pay dates for September are September 1, September 15, and September 29.

Ways to Work Out Biweekly Payroll

How does biweekly pay work? How can it be calculated? If you’re unsure how to calculate biweekly payroll, use our biweekly pay calculator, which will walk you through the process.

Daniel, for example, is an hourly worker who currently earns $25 per hour and works 40 hours per week on average. Daniel worked 81 hours during the previous pay cycle. Here are the estimations you would need to perform to calculate Daniel’s biweekly pay properly:

Step 1: Determine Daniel’s gross salary. Here’s how it works:

$2,037 gross pay – $420 taxes – $50 insurance = $1,567 net pay

It is down to the employer and business on which route they take with paying their team. Commonly, the employer is likely to do a checklist of pros and cons for each method when deciding which one to go for.

When looking at why they would choose biweekly over the others, there are benefits and disadvantages to the employer.

$2,000 results from 80 regular hours multiplied by $25.

Step 2: Next, you must compute overtime hours. 

This is accomplished by multiplying the number of overtime hours by 1.5 to arrive at the overtime total to be paid:

One overtime hour multiplied by $25 multiplied by 1.5 equals $37.50.

Step 3: Calculate Daniel’s gross pay

To calculate Daniel’s gross pay, add his regular pay to her overtime pay:

$2,037.50 is the sum of $2,000 plus $37.50.

Also, you can check this: What Is Base Pay? How Does It Work?

Step 4: Subtract taxes and any other deductions 

Daniel may have it from his gross pay. Assume Daniel’s tax deduction is $420 and his insurance deduction is $50. His net pay would be calculated as follows:

$2037.50- $420-$50 = $1,567.50

Conclusion

This article answers the question “How does biweekly pay work?” When setting up payroll for the first time, determine which payroll cycle will work best for your company.

Remember that a biweekly pay period is a good option for those with hourly employees. Still, if many of your employees are salaried, you may be better off with semimonthly. Remember that changing your payroll cycle can hurt your employees, so make your decision wisely.

FAQs On How Does Biweekly Payroll Work

References

• Indeed.com – How does Biweekly pay work?.
• Hubspot.com – How does Biweekly pay work?
• Checkmark – work pay
• Bamboohr – How does Biweekly pay work?

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