It’s crucial to know how often you’ll be paid, whether you’re applying for a job or already have one. Depending on your company’s payroll schedule, you may receive your salary on biweekly pay periods. Understanding the pros and cons of this payment method and how it stacks up against other payment schedules will help you find a job that works best with your personal finances. This article explains the biweekly pay periods in a year. We also explained how to create a biweekly pay period calendar. Why not dive in now?
What Is a Pay Period?
A pay period is the timeframe during which an employee’s hours are totaled and distributed in a certain pay period. The length of a pay period is flexible, but it should always start the day after the conclusion of the preceding period to ensure that all hours worked are properly recorded and rewarded. Most aspects of payroll depend on the frequency of pay periods, including the number of projected paychecks per year and the amount withheld for employee benefits and payroll taxes.
Consistently paying your employees on the agreed-upon schedule is crucial, as it not only helps you attract and keep outstanding workers but also helps you avoid legal trouble. Wage infractions under the Fair Labor Standards Act (FLSA) can result in significant fines if payments are late by even a few days.
Types of Pay Periods
Depending on your budget and the nature of your business, you can select from a few different standard pay periods. Company finances, income patterns, legal requirements, and agreements with employees should all be taken into account when deciding on the most appropriate sort of pay period for your business. It’s possible to use varying pay periods for distinct groups of workers within a single organization. Keep in mind that there is an administrative expense associated with each payroll cycle, even though employees typically prefer more frequent payment schedules. You should strike a balance between the two factors in question.
In light of the foregoing, here are the four options available to you as an employer when deciding how often to compensate your staff for their efforts:
- Weekly pay periods – 52 pay periods per year (53 in leap years)
- Biweekly pay periods – 26 pay periods per year
- Monthly pay periods– 12 pay periods per year
- Semi-monthly pay periods– 24 pay periods per year
What Are Biweekly Pay Periods?
Paychecks are issued on biweekly pay periods, every other week. That works out to 26 paychecks each year, or twice monthly. Depending on your company’s policy, you may be paid as many as three times every month. This is one of the most convenient payment times for businesses to use.
How Do Biweekly Pay Periods Work?
Employers can implement biweekly pay periods by designating a set day of the month to provide paychecks. Some companies may pay their staff every other Friday. Every employee on a salary receives the same paycheck amount. Hourly workers receive paychecks of varying amounts. Typically, companies will hand out paychecks on the fifth business day following the end of the pay period to allow sufficient time for processing employee hours and tax withholdings. This is why, even if your company chooses to stick with the biweekly pay periods, it can take up to three weeks before you see any money from your new position.
Which Industries Use Biweekly Pay Periods?
More than 36% of companies in the United States pay their workers using biweekly pay periods. The Department of Labor (DOL) identifies the following sectors as those most likely to utilize biweekly pay periods:
- Health and educational facilities
- Hospitality and amusement
- Information
Before deciding how often to pay your employees, you should research the state’s payday requirements from the Department of Labor.
How are Biweekly Pay Periods Calculated?
if you want to use biweekly pay periods for a worker, it is determined by multiplying their total hours worked over a two-week period by their hourly rate. The hourly rate can be calculated from gross pay by dividing the total payment by the number of hours worked.
A wage of $25 per hour would be calculated as follows: ($2,000) / (80 Hours Worked in Two Weeks) = ($2,000) / ($25).
Salaried workers often receive a certain sum each year. The biweekly pay period for a worker making a fixed salary of $50,000 is $1,923.08, calculated by dividing the annual wage by 26 (50,000 26 = $1,923.08).
Biweekly Pay Periods vs. Semi-monthly Pay Periods
In many ways, biweekly pay periods vs semimonthly pay periods are very similar. If you are paid by biweekly pay periods, you will receive your paycheck every other week; if you are paid semimonthly, you will receive your paycheck twice a month. Employers often pay their workers on the second and fourth Fridays of each month. Sometimes, businesses will pay their staff twice monthly, on the 15th and 30th. Instead of 26 paychecks, like biweekly pay periods, semimonthly pay only results in 24. To make up for the fact that there will be fewer paychecks in total, each will be slightly larger.
If you make $30,000 per year, here’s how your pre-tax paychecks compare, whether you get biweekly pay periods or every month:
- Semimonthly pay periods: $30,000 / 24 = $1,250 per payday
- Biweekly pay periods: $30,000 / 26 = $1,153.85 per payday
There are fewer paychecks in total, but each one is larger due to semi-monthly pay schedules. Paydays are reduced to every two weeks, but there are more of them. If you’re paid by the hour, you can use the same principle so long as you account for any overtime you put in within a given pay period.
Advantages of Biweekly Pay Periods
Getting to know about the advantages of biweekly pay periods is very important. Here are some benefits of biweekly pay periods include:
#1. Bonus Pay
There are two more pay periods per year with biweekly pay periods than with semimonthly pay periods. If you are an hourly worker, it can be helpful to receive three paychecks in a single month.
#2. Improved Uniformity
The biweekly pay periods are quite reliable, as paychecks, are always issued on the same day. Instead of being paid on varying days of the week, you have a set pay date that you can count on.
#3. Better Budgeting
When you know you’ll be getting the same amount of money every week, you can budget more precisely.
Potential Challenges of Biweekly Pay Periods
Biweekly pay periods can make it more difficult to estimate your net earnings for the period. When you get paid every two months instead of every month, it’s much simpler to account for things like taxes and perks. With biweekly pay periods, you’ll have to do some extra math in February and March to determine your net compensation for the month. If you need to figure out anything else about your pay, you can always turn to the internet for assistance.
The fact that biweekly pay periods may not be as reliable as weekly ones is another drawback. If you have regular expenses, such as a mortgage or rent payment, this could make it harder to meet your financial obligations. However, with careful budgeting, it is possible to put away money from each paycheck and meet all of your financial responsibilities.
How Companies Choose Pay Periods
Employers typically take into account the following when deciding on a pay period:
#1. The Payroll System
There are payroll systems that charge businesses a fee each time they do payroll. Companies that utilize this software may choose to pay their employees bimonthly rather than monthly so that they can save money on payroll processing twice a year. Paychecks may be issued less frequently than once per month by some companies.
#2. Budget
Companies can turn a profit by properly managing their costs. Payroll is one example. They may be more inclined to put their biweekly salary to use in the organization’s budget, as it is more stable than semimonthly income. This might also help a business decide which days of the week to potentially allocate funds for payment.
#3. Employee Satisfaction
How workers feel about the pay cycle is another factor that should be taken into account by companies. Paying workers on a more regular schedule like every two weeks or even once a week will help them better manage their finances. Employers might benefit from asking workers how they feel about different pay cycles before deciding on the ideal one. To accomplish this, a business could conduct polls among its staff or hold individual meetings with each division.
#4. Industry
Similarly, the frequency of paychecks is not always standard across all businesses. Since working hours in the manufacturing, construction, and hospitality industries tend to be more sporadic than in other sectors, weekly compensation may be the norm. These workers may benefit from a weekly pay schedule because it is easier to plan their finances around it. Since it is a regular cycle for both businesses and workers, biweekly compensation is typical in many fields.
How Do Taxes Work With Biweekly Pay Periods?
The length of a worker’s pay period has no bearing on their tax obligations. The annual amount earned is used to calculate tax liabilities, not the number of times you receive a paycheck during the year. The same holds true for company contributions to social security and Medicare. For pay periods of a week, a week, and a month, the taxes deducted from each paycheck will fluctuate, but the total amount is the same.
How to Create Biweekly Pay Periods Calendar
Even if you’ve never done it before, setting up a payroll schedule is a breeze. The following are the steps to take when creating biweekly pay periods calendar:
#1. Choose a Payroll Schedule
Choosing a payroll schedule is the most time-consuming component of creating a payroll calendar. When deciding on a payroll schedule for your small business, it is important to consider state regulations, the different types of employees you have, and the cash flow cycle.
#2. Decide How You’ll Run Payroll
You’ll need to select whether you’ll utilize payroll software, a bookkeeper, or both to process payroll. Give your accountant or bookkeeper your payroll schedule, employee information, and financial institution details if you need their services. Payroll software requires you (or your accountant or bookkeeper) to enter your chosen pay schedule and financial information. If you want your payroll to go off without a hitch, check the planned pay dates and set up reminders. Step three is for you if you process payroll manually.
#3. Determine Pay Dates, Pay Periods, and Payroll Processing Dates
Look at the calendar for this year to see your pay dates and the pay periods that correspond to them. Then, you may calculate the time you’ll need to process payroll to pay your employees by working backward from their actual pay dates.
#4. Account for Holidays
Weekends and holidays should not be overlooked. It’s inevitable that a pay date will land on one of these if payments are made according to the calendar. You should be aware of bank holidays if you pay your staff on a specific day of the week. Christmas, New Year’s, the Fourth of July, Veterans Day, Juneteenth, and Indigenous Peoples Day all need your undivided attention. Banks will be closed even if you choose to remain open for business on these Federal Reserve-recognized holidays, which occur on different days of the week every year. Your actual pay date should be the last business day before the shutdown or the day that banks reopen if your expected payday occurs on a weekend or holiday.
#5. Set Reminders
Schedule annual payroll reminders in your planner, not just for the actual pay date but also for when you need to begin processing payroll. Put in a note at the end of the year to remind yourself to do the same thing next year.
Factors to Consider When Setting up a Biweekly Pay Periods Calendar
The following factors should be taken into account while selecting a timetable and creating a biweekly pay periods schedule:
#1. Worker Profiles
Do you employ only hourly workers, only paid workers or a mixture of both? Salaried employees typically receive the same amount of money every pay month, while hourly workers’ wages fluctuate. To better manage cash flow, you should know which option is ideal for your company.
#2. Cash Flow
Think about when and how your company produces money. Payroll problems could arise at sluggish times of the year or during the holidays if you don’t plan ahead.
#3. Calculating Paychecks
Do you plan on using payroll software, an accountant, or your own time to handle payroll processing? Saving money by handling payroll in-house requires extra labor, especially if you use a calendar with many pay periods. Having your payroll processed more frequently usually comes with an additional fee from bookkeepers and accountants.
Is Biweekly Pay Twice a Month?
Employees who are paid semimonthly receive their paychecks 24 times each year (twice monthly for 12 months, equaling 24), while those who are paid biweekly receive theirs 26 times per year (every other week for 52 weeks, equaling 26).
What Is the Difference between Bimonthly and Biweekly Pay Periods?
If your biweekly payday is on a weekend or holiday, deposits may not be made or checks may be delayed. You’ll receive two bonus payments per year: The biweekly pay schedule provides workers with two paychecks every two weeks. They get three paychecks in a month, twice a year.
Is It Better to Be Paid Biweekly or Monthly?
Getting paid biweekly instead of monthly allows you to easily pay down debt or build savings during the months in which you receive an extra paycheck. Time and a half is simple to compute: Hourly workers are entitled to overtime pay, whereas salaried workers are not.
Is Biweekly Better than Weekly?
Weekly or biweekly payments may not always be preferable. The way you manage your finances and set your priorities is a major factor. You’ll get paid more frequently but with less overall money if you choose weekly payments. Even though they are biweekly, the checks are more generous, and there are more of them.
Final Thoughts
Think about the company’s payment schedule as you weigh your options. Before taking a job, it’s a good idea to inquire about the frequency of payments to better plan your finances. Think back on the frequency of your paychecks from this and previous jobs, and how it affected your financial planning. To maintain or enhance your current standard of living, it is essential that you create a realistic budget that takes into account your pay period length.
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