Think back to when you were an employee rather than a small business owner. As you toiled away at your tasks, you might have occasionally reminded yourself that it was all worth it to get paid every two weeks. That last part is key – every two weeks. Many small businesses pay their employees every other week, on a biweekly pay schedule. Read on to learn how you can implement and administer this schedule for your business.
A biweekly pay schedule is the payment of employee wages every two weeks, often on a Friday. For example, if, in October 2021, your employees received their paychecks on Friday, Oct. 8 and Friday, Oct. 22, you paid them biweekly.
There are four weeks in a month, so theoretically, biweekly pay schedules result in two employee paychecks per month. In reality, biweekly pay schedules can occasionally result in three employee paychecks per month. If your first payday of the month was Dec. 1 instead of Dec. 8, your biweekly paydays would have been Dec. 1, 15 and 29. That’s three paychecks in a month on a biweekly pay schedule.
Biweekly pay schedules result in employee payments every two weeks, but in some months, that means three paychecks.
Biweekly pay schedules can easily be confused with another popular pay schedule: semimonthly. Semimonthly pay is often referred to as “bimonthly,” though that’s not technically correct. As you can see from the definition of “biweekly,” “bimonthly” would mean every other month, while semimonthly means twice a month.
Because semimonthly pay means paychecks twice per month, and biweekly pay schedules often result in two paychecks per month, these pay schedules may seem like the same thing. However, as the above example shows, biweekly and semimonthly aren’t quite the same. They differ in these three key ways:
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You may wonder if biweekly pay schedules are appropriate for both hourly and salaried employees. Most payroll and HR experts would agree that biweekly pay is a great choice for salaried employees. Opinions may differ on whether biweekly is suitable for hourly employees.
Some experts argue that weekly pay schedules help hourly employees better track how much overtime they worked in a week. These experts might also say that weekly pay is better for low-wage employees, as low wages paid biweekly can prove burdensome to one’s cash flow. With weekly access to cash, low-wage employees may have an easier time paying bills and thus avoid harsh late-payment penalties.
However, other experts would say that biweekly pay schedules should still be your go-to for your hourly employees because it’s easier for your business to track.
Biweekly pay calculations are typically easy for both hourly and salaried employees. Even if they were difficult, your payroll software would automate them for you. Follow these steps to calculate biweekly pay for hourly employees:
Follow these three steps to calculate biweekly pay for salaried employees:
The U.S. Bureau of Labor Statistics (BLS) found that, as of February 2020, 43% of businesses paid their employees biweekly. This figure makes biweekly pay the most popular option across all industries.
The BLS has found that construction, trade and manufacturing employers often pay weekly. In fact, across all industries, 33% of businesses pay weekly. Semimonthly pay is the schedule of choice in 19% of companies, and it’s nearly as common as biweekly in the finance industry. Some financial, professional, education, health, and leisure services pay monthly, but this is the least prevalent pay schedule, with only 4.7% of businesses using this option.
Organization size may more closely correlate to pay schedule choices. The February 2020 BLS data shows that the prevalence of biweekly pay increases with a company’s number of employees. Interestingly, though, 34.9% of companies with under 10 employees pay weekly as compared to 33.7% that pay biweekly. Companies with 10 or more employees most often pay biweekly. Learn more about all the different options when it comes to payroll frequency.
Biweekly pay is the most common pay schedule, but some small businesses and a handful of labor-intensive sectors opt for weekly pay instead.
When a practice is popular with small businesses, it’s probably quite advantageous to employers. This notion holds true with biweekly pay. However, it’s not without its imperfections.
Here are some reasons why you may choose to pay your staff biweekly.
Some employers may opt for other pay schedules because of the following disadvantages of biweekly pay.
Generally speaking, the best way to start paying your employees biweekly is through payroll software. Setting up a biweekly payroll schedule on these platforms is typically easy. You’ll log into your account, go to your payroll interface and look for an option to add a pay schedule. You can then indicate which of your employees you’ll pay on this timetable. Assuming that you pay all your employees biweekly, you can apply this schedule to your entire staff.
However, some employers may pay certain employees biweekly 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 it helps lower-wage hourly employees increase their cash flow. It does so while minimizing the potential costs of also running weekly pay runs for salaried employees, who can often wait longer for wages since they tend to be higher.
Either way, payroll software is the easiest way to run a biweekly payroll schedule. This notion is especially true if you choose software that allows you to run payroll an unlimited number of times without additional fees. In our OnPay review, we found the company never charges fees when you run payroll, no matter how many times you do so. As you research payroll software, you’ll almost certainly find an option that’s both convenient and affordable for starting – and maintaining – biweekly pay.