What is Biweekly Payroll? Benefits, Examples & 2023 Calendar
December 13, 2022
Which employer doesn’t want to increase the efficiency of their staff, and which employee doesn’t want to get paid more? No one. Biweekly payroll is the golden middle that keeps both employees and employers happy.
Compared to weekly payrolls, it takes less time to process biweekly payrolls. Also, compared to other payroll systems, such as semi-monthly or monthly, employees receive more pay stubs in a year.
They don’t get paid as often as with the weekly payroll, nor get paid fewer times like with the semi-monthly and monthly schedules. However, deciding whether biweekly is the right payroll system to implement depends on multiple factors, such as location and staff.
This article will discuss the biweekly payroll system, its pros and cons, and its implementation.
- The biweekly payroll system is based on paying employees every other week, meaning that at the end of the year, employees will have received 26 paychecks.
- Biweekly payroll has many advantages, including happier employees and reduced processing work for accountants and HR staff.
- There are also certain drawbacks to biweekly payroll, including complex payroll calculations, higher processing fees, and smaller pay stubs.
- To calculate biweekly payroll for salaried employees, simply divide their annual salary by the number of yearly pay stubs.
- For hourly employees, you must multiply their hourly rate by the number of worked hours over two weeks.
- In the 2023 biweekly payroll calendar, the first payday for the year is on January 13.
What is Biweekly Payroll?
A biweekly payroll states that employees will be paid twice per month on a regular basis. Establishing a weekly payroll intends to provide employees with cash flow earlier than the monthly payroll, and it helps managers reduce their processing work as compared to weekly payrolls, even though the salary remains the same (the yearly pay divided by 26).
With a biweekly payroll system, your employees (or independent contractors) will get paid every other week according to a recurring date of the employer's choice. Since the year has 52 weeks, employees receive 26 paychecks per year. More accurately, there will be ten months in which they receive two payrolls and two in which they receive three payrolls.
When starting a new job at a company that pays biweekly, employees might be caught by surprise when their first paycheck is delayed past the expected payday. That happens because it takes a few days for their financial details to get registered in the system.
Which Industries Use Biweekly Payroll?
The biweekly payroll model is one of the most preferred by employers. According to statistics, around 36.5% of private businesses in the US have chosen to pay their employees this way. The dominating industries that rely on this payment system are:
- Information Technology
- Health Services and Education
- Leisure and Hospitality
However, in some states, the payment schedules are regulated by the state. The Department of Labor (DOL) is responsible for allocating specific requirements for each state. For example, if you’re located in the U.S., have a look at their payday requirements.
What is the Difference Between Biweekly and Semimonthly Payroll?
There's a slight difference between semi-monthly and weekly paychecks. They both revolve around sending payrolls twice a month, but the number of pay stubs and the pay date is established differently.
Another concept similar to semi-monthly is “bimonthly.” It essentially implies two payments per month, but often people mistake bimonthly with “once every two months.” That’s another meaning for bimonthly, but when we talk about payroll, it isn’t relevant.
Use semi-monthly as a term to avoid confusion, and read about its key differences with the biweekly model before deciding:
Number of Pay Stubs
Compared to the biweekly payroll, the semi-monthly payroll delivers payments strictly two times per month, regardless of how many weeks there are. Therefore, an employee receives 24 pay stubs per year, while those paid on a biweekly payroll receive 26 pay stubs per year.
Biweekly payroll has a more dynamic organization of pay stubs since there will be three pay stubs per month, twice per year. Also, there is an extra pay stub in leap years, while the number of pay stubs is consistent throughout the whole year for semi-monthly payrolls.
Pay Stub Amount
The pay stubs received by employees in each case are different because their numbers differ. For biweekly pay stubs, the payments might be smaller because there are more of them in a year (26).
Meanwhile, for semi-monthly pay stubs, the number of pay stubs into which the gross amount per year is divided is smaller (24), which means they’re slightly larger. However, the total amount one makes per year remains the same in both cases. Only the distribution time changes.
Employees who are paid on a semi-monthly basis will receive paychecks on the 15th and the 30th of the respective month. What raises concerns about this payment approach is the fact that when payday falls on the weekend, the pay is delayed.
Often, the pay is delivered on the preceding Friday. Meanwhile, with bi-weekly pay stubs, employees are paid on the same day every other week, no matter the date.
What are the Benefits of Biweekly Payroll?
The biweekly payroll has several benefits for both employers and employees. That’s why many companies around the world use it as a means of payment schedule.
Benefits for Employees
- Better budgeting. Employees can arrange their finances more wisely since they receive the money on the same day each month. Plus, they don’t have to struggle with budgeting for a long period as they would with monthly payrolls.
- Financial security. Biweekly payments are more predictable and reliable than other systems (such as semi-monthly), giving more financial security to employees.
- More paystubs. The biweekly payroll includes two more paychecks than the semi-monthly payroll and 14 more pay stubs than the usual monthly payroll.
Benefits for the Organization
- Efficiency. Biweekly payroll helps HR staff process payments faster and with minimal errors in comparison with other systems, such as weekly payroll.
- Reduced costs. Payroll providers usually charge for each payroll run. Biweekly pay systems have lower costs compared to weekly payrolls since you run payments twice a month instead of four.
- Simplified calculations. Calculating overtime pay is much easier compared to other systems, such as semi-monthly payrolls, since overtime pay is calculated on a workweek basis.
Disadvantages of Biweekly Payroll
Considering that each business has different needs and capabilities, the solutions that fit them are different as well. Here are some of the main disadvantages of biweekly payroll.
Disadvantages for Employees
- Smaller pay stubs. With biweekly payrolls, employees will receive smaller paychecks since they will receive more of them. Eventually, this could lower their motivation as it appears at first like they’re not earning much.
- Delayed pay stubs. Due to the complexity of payroll calculations and the higher number of paychecks, organizations might run into mistakes and even postpone payroll.
Disadvantages for Organizations
- Financial capability. With the biweekly payroll system, two months in a year have three pay stubs which means that you have to stay prepared financially to handle it. This is especially true if your organization has a large workforce, which will drastically affect your finances if you’re not prepared.
- Higher fees. Usually, payment processors charge organizations for each payroll run. Biweekly payroll might lead to higher processing fees as compared to other types of schedules, such as monthly or semi-monthly payrolls.
- Unsatisfied employees. For organizations that work with independent contractors who don’t receive consistent projects, this model might face dissatisfaction. They might want to get paid on shorter pay periods, such as weekly, so they can receive money sooner.
In general, the biweekly payroll works fine as long as you can afford the processing fees and extra pay stubs and have a reliable HR team to handle the accounting work in this model.
How to Calculate Biweekly Payroll
Calculating the biweekly payroll is less complicated than calculating a monthly payroll but more complicated than a weekly payroll. However, the biweekly payroll for both types of employees is easily calculated in just a few simple steps.
Biweekly Payroll for Salaried Employees
For employees paid on an hourly basis, the payroll is calculated by initially taking the overall annual pay and dividing it by the number of pay stubs. (Annual salary/Nr. of pay stubs = biweekly pay) For instance, let’s suppose a web developer is paid a salary of $70,000 per year.
Under a biweekly payroll model, the pay stubs will have a value of $2,692. That’s because 70,000 / 26 = $2,692. And in leap years, where there are 27 pay stubs, their value will be $2,592. But keep in mind that in the two months with three paydays, you should be prepared to pay an overall amount of $8,076 within a month.
Biweekly Payroll for Hourly Employees
For hourly employees, the calculation process isn’t that complicated either. All you have to do is multiply the hourly rate by the number of working hours for the two-week period. (Hourly rate * Nr. of working hours for two weeks = Biweekly pay).
Let’s say that another web developer is paid an hourly rate of $30 and regularly works 40 hours per week. All we have to do is multiply 30 by 80, and we’ll get the pay stub amount, which is $2,400.
However, if the process appears challenging to you, there are online biweekly payroll calculators that you can use to find the value of a pay stub and more.
Biweekly Payroll Calendar
For businesses that are currently running biweekly payrolls or have decided to implement it in 2023, here is a biweekly payroll calendar prepared by the Greensboro HR team.
If you want to calculate the biweekly payrolls in a seamless manner, you should use a biweekly payroll Excel template.
Biweekly Payroll FAQ
1. Is biweekly payroll better than semi-monthly payroll?
The bi-weekly payroll often proves to be better than the semi-monthly payroll for employees who want to receive more pay stubs. More exactly, bi-weekly payroll implies that employees will receive two more pay stubs per year as compared to the semi-monthly pay system.
2. What does biweekly mean in salary?
The biweekly payroll meaning isn’t anything complicated. A biweekly salary implies the use of a payment schedule through which employees receive their pay every other week. In a regular year, employees receive 26 pay stubs, and in a leap year, they receive 27 pay stubs.
3. How do you calculate biweekly payroll?
Firstly, you have to determine the total gross salary and then divide that number by the number of paydays (26 in a regular year and 27 in a leap year). If you’re an hourly employee, you have to multiply the number of working hours during two workweeks by the hourly rate.
4. Do you get taxed more if you get paid biweekly?
When you get paid doesn’t have anything to do with the amount you receive in each paycheck. Tax liabilities are calculated by taking into consideration the total amount earned per year by employees rather than their paycheck frequency.
The biweekly payroll system is one of the most reasonable payroll schedules currently used by organizations, and it is even mandatory in some states. The payroll model implies that a business should pay employees every other week, sending 26 pay stubs annually.
Biweekly payrolls deliver paychecks to employees twice per month, but differently from semi-monthly payrolls, the payment is made every other week instead of on a specific date. Even though the paychecks are slightly smaller compared to semi-monthly payrolls, they’re more frequent, which keeps employees happy.