You arrive at that amount by dividing 50, by 24, since there are two pay cycles each month. It may look as if you are paid less, but you receive two additional paychecks each year. These same figures apply to those who are full-time non-salaried employees. The main difference is each paycheck will be adjusted to account for overtime hours or time off taken within the pay cycle. Biweekly is the preferred pay schedule among many industries. However, some utilize other schedules.
Construction, manufacturing, natural resource and mining businesses usually prefer to pay their employees weekly. Those working in these industries often work irregular hours each week, so a weekly pay schedule may more accurately reflect their cashflow needs.
For instance, employees may lose hours due to severe weather, or work overtime to complete a job by a deadline. Monthly pay schedules are the least common across all industries, though some financial service businesses may send monthly checks. High-wage companies tend to favor monthly pay cycles, whereas low-wage companies typically prefer to pay weekly. High-income earners can usually manage only being paid once a month. Those on a lower income may need a weekly check to help pay bills and budget their finances.
There are advantages to being on a semimonthly pay schedule, including:. A semimonthly pay schedule costs less for a business since it only ever has to run payroll twice each month. Not only does this reduce the cost of paying a payroll service, but it also reduces the time cost of employees who have to manage payroll. Since you never have an additional paycheck in a month, that deduction will be the same every time.
There are reasons many employees prefer a biweekly pay schedule, including:. Paychecks come on the same day every two weeks. While semimonthly checks are always on the same dates every month, they are not always on the same day. Overtime pay is usually determined based on an entire workweek. Whether you choose a bi-weekly or bi-monthly payroll system depends on the needs of your business. If having set paydays that coincide with when your clients pay you is a large consideration, a bi-monthly pay system could be the right choice.
If you want to pay out less each pay period even though you'll have two additional pay periods during the year, the bi-weekly option could be the right choice. Regardless of the option chosen, both result in the same amount being paid to employees. Another thing to consider is the per-hour rate. Hourly employees automatically know their hourly rate, but salaried employees might not, and sometimes they need this information. For the most part, bi-weekly pay periods inflate the hourly rate.
Picking between bi-weekly and bi-monthly payroll periods is really up to the business. Knowing how customers pay a business, as well as being aware of any specific state requirements regarding payroll can help a business owner determine the best way to pay his or her employees. Francis has been a freelance and small business owner for 20 years.
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