1. HR Glossary
2. Biweekly Pay

Biweekly Pay | Definition & Meaning

Biweekly pay, a popular payment frequency among businesses, offers regular compensation to employees every two weeks. This system provides a consistent income stream, enhancing financial planning and stability. By understanding the advantages and considerations of biweekly payroll, employers can optimize their payroll processes and foster employee satisfaction.

This can be described as a form of payment structure in which a firm remunerates its employees weekly on a specific day. Determining the amounts to give the employees as wages or salaries is time-saving, and the likelihood of making wrong calculations is minimal. For efficient calculation of bi-weekly payments, you can use the factoHR payroll software for your organization.

In this article, you will learn more about the biweekly pay and its other details.

What Is a Biweekly Pay?

Biweekly pay is a type of payment in which an employee receives earnings every two weeks. Each pay period lasts 14 days, beginning and finishing on the same days of the week. This yields approximately 26 pay periods yearly, with minor variances due to the calendar year not completely coinciding with these intervals.

During each 14-day pay period, an employee's hours are logged and paid the following week. Overtime is monitored weekly, usually at the beginning of the pay month. This payment plan allows employees to manage their spending better and feel more comfortable because they receive half the amount.

Different industries may also have more distinct pay cycles in an organization. For example, manufacturing, construction, and hospitality companies may pay their employees every week because their hours are more irregular than others. Paying these personnel weekly makes budgeting more manageable than other pay periods.

How Does Biweekly Payroll Works?

After the close of the payroll period, the payroll practitioner will compute the overall sum payable to the employee, as well as other deductions for insured premiums, state taxes, federal taxes, or any other deduction valid to the company.

They are then paid at the end of the week after the pay week or pay cycle. Since there are 26 bi-weekly pay periods in a year, there will be two months in which employees receive three paychecks.

How is Biweekly Pay calculated?

This pay plan generates a paycheck every other week. Typically, a company sends payments on the same day every pay week. If you are paid hourly, your paychecks may differ because they reflect the number of hours you worked during that pay period, including overtime.

• You need to find out the hourly wage. This is the amount paid per hour of work before taxes and deductions are applied.
• Once you've determined the hourly wage, you can find the monthly pay by multiplying it by the number of hours worked in a pay period.
• The normal full-time employee schedule is 40 hours per week. However, your hours may fluctuate.
• To calculate this pay, multiply the number of hours you work per week by two to get the number of hours that you work each pay period: hours per pay period = hours per week × 2
• Then increase by hourly wage: biweekly pay = hours per pay period × hourly wage.
• To account for overtime, multiply hourly wage by 1.5 and then multiply that by the amount of overtime hours worked. Then, add it to your paycheck.
• Once knowing about the time in this pay period, account for taxes and withholdings.

Does Biweekly Pay Impact Taxes?

The tax deductions are always the same, even though the pay periods may be weekly, bimonthly, or monthly. These taxes are based on total earned income in a given year rather than the number of paychecks received. The taxes are based on the government's income tax slabs; each employee is liable to pay the tax in the slab they fall into.

This approach also applies to employer payroll taxes. While tax deductions per paycheck may change between pay periods, the total annual tax amount stays consistent.

How is Biweekly Payroll Different from Semi Monthly Payroll?

A semi-monthly pay plan generates two paychecks every month. One check arrives in the middle of the month, while the other arrives at the end of the month or at the start of the next. Usually, team members receive their paychecks on the first and fifteenth of the month or on the fifteenth and end of the month. With the semimonthly frequency, you will receive 24 paychecks every year. Because months are not all the same length, some paychecks are larger or smaller than others.

This pay schedule delivers a paycheck every other week. Typically, a business sends paychecks on the same day each pay week. With this schedule, you get 26 paychecks every year. If you earn a salary, your compensation is fixed, which means your paycheck always contains the same amount. If you are paid hourly, your paychecks may vary since they reflect the hours you worked during that pay cycle, including overtime.

Advantages of Biweekly Payroll

More Paydays

These paychecks provide two more per year than semi-monthly pay.

Better Budgeting

Having a constant paycheck every other week may allow you to plan your costs better.

Overtime compensation is more straightforward to compute for hourly workers because overtime incentives are included with each payment.

Consistency

Pay dates are set, and the employer and the recipient know when the paycheck will be credited. A steady and consistent cash flow makes budgeting easy.

Fewer Payroll Errors

A steady payroll calendar implies fewer mistakes for payroll managers, whether they work for a payroll service or your HR department.

Predictable Payments

Establishing a consistent payday offers employees financial security and reduces the uncertainty associated with irregular pay dates.

Consistent Taxes

An employee's tax liabilities remain constant regardless of whether a pay period is weekly, bimonthly, or monthly.

Disadvantages of Biweekly Payroll

• It necessitates more paperwork: the more payrolls are processed, the more administrative work is necessary.
• More room for error: With more paperwork, there is more room for mistakes by employees and management when documenting hours or running time reports, as well as by the payroll department or organization.
• More expensive: The more frequently you pay, the more expensive it is.
• Paychecks are smaller because this payroll processes more often than bimonthly payroll.
• Difficulty accurately calculating take-home pay: Because you receive two additional paychecks per year on this schedule, there are two months when you must perform additional calculations to determine your take-home income.

Biweekly Payroll Best Practices

When introducing this payroll, a firm should examine a few factors.

• Inform staff about the change. Before payroll processing begins, employees should be aware of this pay period's benefits and drawbacks.
• It is critical to adequately explain the benefits of these payments and compile a list of frequently asked questions to alleviate any concerns they may have.
• Employers also need to take care of overtime pay calculations for the employees working overtime.
• Provide employees with as much advance notice as possible before making any changes to pay periods so that they can make any required financial modifications to prepare for the transition.

Challenges of a Biweekly Payroll

There are a few challenges when knowing about this payroll, which are as follows:

• One potential downside of this pay is that it can take more work to calculate your take-home income precisely.
• It can occur less frequently than weekly pay. If you have weekly bills, meeting your budget criteria may become more difficult.
• Because the pay cycle is shorter, payments will be more frequent but less generous.

However, you can save money and manage your financial responsibilities carefully.

Is Biweekly Suitable for Your Company?

Bi-weekly payroll is frequently used and ideal for firms, especially those with a mix of hourly and salaried employees. However, the growing acceptance of bi-weekly pay does not mean it is the best option for every firm. Employee preferences, HR management requirements, payroll software costs, and administrative needs should all affect your decision.

Conclusion

Employers may carefully budget their spending to generate a profit. This could involve payroll. Because biweekly pay is more constant than semi-monthly pay, they may be more inclined to use it to supplement their organizational budget. This can also assist a corporation in better determining which days of the week may require payment. Compensation is typical in many businesses since it ensures a consistent cycle for employers and employees. To automate and manage your pay schedule, schedule a demo with factoHR today!

FAQs

How to Calculate Biweekly Pay?

To calculate the first document, track employees' work hours between the pay period's start and finish times. Once the hours have been recorded, multiply the total hours completed by the employee's hourly pay rate to calculate the regular wages owed for that time. Overtime is calculated differently and paid extra.

How Long Is the Bi-weekly Pay Period?

This pay cycle lasts 14 days and includes two full weeks of labor. Employees receive their paychecks at the end of the two weeks.

Is Biweekly Pay Taxed More?

No, it is not taxed higher. The total amount of taxes you pay remains the same, but the tax amount is distributed across fewer paychecks, so each paycheck may have somewhat more tax withheld than weekly pay.

How Many Pay Periods in Bi-weekly Payroll?

In general, there are 26 pay periods per year; however, depending on the days of the week, there may be 27 pay periods. In some months, the standard pay date will be three times instead of two.

What is the Difference Between Bi-weekly Payroll and Semi-monthly Payroll?

Employees get paychecks every two weeks, typically on the same day of the week. This yields 26 paychecks per year or 27 during leap years. Employees who receive semi-monthly salaries are paid twice a month, typically on the first and fifteenth or the fifteenth and last day of the month. This yields 24 payouts per year.

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