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Table of Contents

Easier full-service payroll for small businesses

With pay frequency, everyone has something to say. The company says “less,” the employees say “more,” and the state laws have a few words to say as well. As 36.5 % of U.S. private businesses pay their employees every two weeks, biweekly pay is a great middle ground. Let’s find out if that’s the best fit for your business.

What Is Biweekly Pay?

Biweekly pay can be defined as a pay period in which employees receive pay every other week on the same day of the week (e.g. employees get paid every Friday).

Should Your Company Pay Biweekly?

Consider these factors when deciding on payroll frequency. Firstly, there are wage payment laws that might dictate how often employers need to pay their employees depending on your state. According to this article, also consider analyzing your employees by how much they work, how much their pay varies, whether they’re hourly or salary workers, etc Include taxes, employee benefits package costs and processing costs into account. With that being said, if biweekly pay is allowed per state law, there are additional pros and cons to consider.

Benefits of Biweekly Pay

In comparison to weekly, semi-monthly, and monthly pay, biweekly pay frequency has its advantages, such as:

  • Employees get paid more often. Generally, employees prefer to be paid more often.
  • Calculating overtime is simpler. Mathematically, weekly and biweekly pay periods make calculating overtime easier compared to semi-monthly or monthly.
  • It’s less expensive than weekly. Less frequency means lower costs. If payroll is completed through a third party, the third-party typically charges per payroll run. If done internally, biweekly requires fewer man-hours than weekly.

Disadvantages of Biweekly Pay

Biweekly pay also has its disadvantages compared to weekly, semi-monthly, and monthly alternatives, such as:

  • It requires additional paperwork. The more payroll runs, the more administrative work is required.
  • There’s more room for potential error. With additional paperwork comes more room for potential errors both by the employees and managers recording hours or running time reports and by the payroll department or company.
  • It’s more expensive than monthly. The more frequent the pay, the more expense it incurs.

Alternatives to Biweekly Pay

Depending on your state’s individual laws, some of these alternatives might not be available to you. Before looking into these options, look into your state’s requirements regarding pay frequency.

Weekly

This tends to be an employee favorite as they get paid more frequently than the other options. From the administrative side, this may take more time and workload, but it’s also easier to run weekly payroll mathematically.

Semi-Monthly

This term refers to a pay period that occurs twice a month on the same day of the month. For example, the 14th and the 28th or the 15th and the last day of the month. This is convenient for employees since the pay cycle typically ends close to the last day of the month making budgeting easier. This is also a pro for accounting if the pay period always ends on the last day of the month since it lines up with end-of-month and end-of-year processes. When it comes to overtime calculations, however, this can be more confusing and if employees manually track their time, it’s easy to forget when to turn in their timesheets.

Monthly

With monthly pay, employees are paid on the same day of each month. The consistency keeps it simple for employees to turn in their hours and know when to expect their paycheck. This is also accounting and budget-friendly as employers only have to run 12 payrolls a year.

Complex

Depending on your employees, some organizations opt to run two separate pay frequencies. For example, they might run biweekly for their hourly (nonexempt) employees but semi-monthly for their salaried employees. This can help their accounting department keep overtime calculations more simple.

Keep in Mind…

Whatever pay frequency is the best fit, include whoever is involved in running payroll in the decision-making process. Moreover, ensure your pay periods are clearly defined for your employees. Inform your workers in advance of their workweek and pay dates to ensure they understand when they will receive compensation and for what hours/work they are being paid.

Easier full-service payroll for small businesses

Reduce payroll errors, stay compliant with complicated laws, and meet deadlines with Eddy Payroll.

Questions You’ve Asked Us About Biweekly Pay

Typically there are 26 biweekly pay periods annually. However, if the pay period ends on the same day every week (e.g. Friday) and the year starts on a Friday, there will be 27 that year.
As taxes are based on a percentage of the employee’s income, no matter what payroll frequency your company uses, the employee will owe the same amount in taxes at the end of the year.

Kayla is the Chief Innovation Officer at Hero Culture, where the passion is to create company cultures of retention using the power of personality.

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