How does Biweekly payroll work?
The first step in the biweekly compensation procedure is to calculate the worker's basic compensation for the period of two weeks or log their hours worked. Businesses check time entries, make adjustments for extra hours, bonuses, or deductions, and complete payroll estimates at the conclusion of the pay period. The net pay is paid to workers after deducting taxes and other withholdings. Some firms could, for instance, pay workers every other Thursday. For employees who are on wages, the payroll amount is the same. Various amounts are paid to hourly workers. Payrolls are often signed, or logged into and sent to the concerned department, by employers for five days following a pay period to check for the time worked and subtract taxes. That's why it sometimes takes three weeks to receive your first paycheck after starting a new job, even if your payroll is biweekly.
How to calculate Biweekly payroll?
Determine the employee's yearly salary or total wage rates for the year before calculating biweekly pay. 26 times workers are paid in a year, so divide the yearly salary by 26. Multiply the rate per hour of workers who work hourly by the total quantity of hours worked over the two-week paycheck period. Before computing the final biweekly payment amount, make sure you take into consideration any extra work, bonuses, or deductions.
For example, if a worker worked for 60 hours in two weeks and gets $15 for each hour, then 60 times 15 equals $900. That’s how much money they make before deductions.
To get the total biweekly amount owing, waged workers whose wages rely on an annual amount divide their yearly salary by 26 (for 26 payments over a year). For example, if a worker earns $52,000 in one year, s/he will get $2,000 every two weeks. ($52,000 divided by 26 weeks = $2,000).
Biweekly vs. Other Payroll Schedules
Salary is credited in different kinds, including monthly, semi-monthly, weekly, and biweekly. A bi-weekly compensation plan gives workers a payment every two weeks as opposed to weekly or monthly.
Semi-monthly Payroll
Since payroll administration takes place on a set day, many firms may choose to implement a semi-monthly pay schedule, which includes processing fewer wages than a bi-weekly one. Under a semi-monthly pay plan, employees get paid on two designated days each month, usually the first and the fifteenth or the fifteenth and the thirtieth. That works out to 24 pay runs yearly and two paychecks monthly, regardless of the number of weeks in a given month.
Weekly Payroll
Weekly wage plans are the most costly and lengthy for businesses since they require 52 payments to be completed over a year. However, this is most effective when using freelancers or contracted workers who get compensated on an hourly basis or who work different/inconsistent hours.
Monthly Payroll
Payroll is handled approximately twelve times per year on an identified regular date in a monthly pay plan. Though it is the most cost-effective option for employers, employees have to wait a whole month to receive each paycheck and get the full remuneration per month.
Semi-weekly payroll
According to the payroll regulations of any company, workers on a semi-weekly pay plan are usually paid two times a week, or two or three times per week. Since regular payroll handling might put the workload on HR and payroll departments, this might not be the first option for many firms.
Biweekly vs. Other Payroll Schedules
Salary is credited in different kinds, including monthly, semi-monthly, weekly, and biweekly. A bi-weekly compensation plan gives workers a payment every two weeks as opposed to weekly or monthly.
Semi-monthly Payroll
Since payroll administration takes place on a set day, many firms may choose to implement a semi-monthly pay schedule, which includes processing fewer wages than a bi-weekly one. Under a semi-monthly pay plan, employees get paid on two designated days each month, usually the first and the fifteenth or the fifteenth and the thirtieth. That works out to 24 pay runs yearly and two paychecks monthly, regardless of the number of weeks in a given month.
Weekly Payroll
Weekly wage plans are the most costly and lengthy for businesses since they require 52 payments to be completed over a year. However, this is most effective when using freelancers or contracted workers who get compensated on an hourly basis or who work different/inconsistent hours.
Monthly Payroll
Payroll is handled approximately twelve times per year on an identified regular date in a monthly pay plan. Though it is the most cost-effective option for employers, employees have to wait a whole month to receive each paycheck and get the full remuneration per month.
Semi-weekly payroll
According to the payroll regulations of any company, workers on a semi-weekly pay plan are usually paid two times a week, or two or three times per week. Since regular payroll handling might put the workload on HR and payroll departments, this might not be the first option for many firms.
Advantages of Biweekly Payroll
The use of bi-weekly payment systems has several compelling advantages.
Easier Budgeting for Employees
Cash outflows are distributed equally during the year due to payroll processing occurring every two weeks, giving the company a steady cash flow.
Fewer Pay Periods for Employers
Bi-weekly payroll offers a constant schedule, which makes it simpler for accounting teams to prepare and manage the method, as there are 26 payments in a year, there is a smaller numbers game when compared with the full month.
Simplified overtime calculation
For non-exempt workers, determining weekly overtime hours is easier to conform to the labor laws in several industries. Also, the overtime hours worked per 2 weeks may be less than a full month.
Challenges of Biweekly Payroll
Every benefit comes with a drawback, and a biweekly pay plan is no different.
Occasional Extra Pay Period
Accounting and budget management may become more difficult in some months when there are three payroll periods, particularly for companies that link payroll to monthly or quarterly financial reporting.
Increased Cost
HR and payroll staff must invest additional effort and resources while processing payroll every two weeks, which may increase the workload year-round. Also, with the added frequency of payments processed, the cost to the company might be higher if their payroll provider charges per payroll run.
Types of businesses that use a biweekly pay schedule
Organizations of all kinds in a variety of industries choose to employ a biweekly pay plan. For several reasons, businesses that have both hourly and salaried workers typically choose this pay structure. In addition to the two additional paychecks or direct deposits that get issued annually, hourly workers receive overtime pay more quickly, and both hourly and waged employees receive paychecks on the same day of the week every other week.