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Bi-weekly pay for an hourly employee is calculated by multiplying their hourly rate by the number of hours worked in a two-week period. For example, an employee who earns $20 per hour and works 60 hours every two weeks will earn $1,200 on a bi-weekly basis. Biweekly schedules are the most common payroll schedule, according to a 2018 QuickBooks Payroll report. It’s pretty simple to calculate an employee’s biweekly pay per hour.
The difference between ‘semi-monthly’ and ‘bi-weekly’ when it comes to payroll is that the number of checks you get is slightly different. If you have the flexibility, you might want to use a couple of different payment schedules depending on the types of employees you have on staff. States all have different laws that apply to payment frequencies. So, https://www.bookstime.com/ before you make a choice, make sure you use this resource from the Department of Labor to check if a payroll schedule is mandated by your state. It’s important to note that semi-monthly pay is often confused with bi-monthly pay, but these two terms mean very different things. Bi-monthly pay means you’re only paying your employees once every two months.
Differences in Payroll Processing: Hourly Workers
As the business owner, you would pick a designated payday, and then ensure that your employees get their paychecks on that specific day every two weeks. A semi-monthly pay period means you’re paying your employees twice each month, often on the first and the 15th, but you’re free to set your own schedule. https://www.bookstime.com/articles/semimonthly-vs-biweekly-payroll Semi-monthly pay periods are a good choice for businesses with salaried employees who don’t mind waiting two weeks for a paycheck. A bi-weekly pay period delivers checks to your employees every other week on the same day (typically on Fridays, but employers can choose the payday that suits them best).
This means employees will be paid twice a month, or 24 times per year rather than 26 times per year. Semimonthly pay schedules for salaried employees are straightforward. Typically, employers will divide an employee’s salary by 24, or the number of yearly paydays.
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And processing payroll only has to happen once a month, making it less time-consuming than other options. From biweekly to semi-monthly pay, there are plenty of options out there. Use this as your guide to land on the payment frequency that’s best for you and all of your hard-working employees. Perhaps your hourly employees want to double-check that their paychecks are in the right amount. Or, maybe your salaried workers want to get more granular and see what their hourly earnings are.
In the case of hourly pay, the amount in the paycheck may differ as it will be as per the number of hours worked in that specific pay cycle. The definition of bi-weekly payroll is a payment schedule where employees receive their paycheck on a specific day of the week, every two weeks. For example, a business operating a bi-weekly payroll schedule might pay its employees every other Friday, irrespective of when one month ends or a new one begins.
Bi-Weekly Payroll Vs Semi-Monthly Payroll: What’s The Difference?
In this case, payroll gets processed on a different weekday, the employee who is running payroll seems to lose track of this responsibility. As per the semi-monthly schedule, the employees get 24 checks in a year. Since the number of days in a month varies, some pay checks may be smaller or larger than the others. For instance, in the month of February, the second paycheck would cover only 13 or 14 days when in the rest of the months, it covers 15 or 16 days.
In an ideal world, there would be four weeks in every month; however, this is not always precisely the case. If employees get paid biweekly, then they would know to expect a payment, every other Thursday, for example. If you are running a semi-monthly payroll period, however, they know that they will receive a payment on the 7th and the 21st of the month. Before choosing, it’s important to know that states regulate how often you must pay employees. You might not be able to use biweekly pay or semimonthly pay frequencies in certain states. Check with your state before deciding how often you run payroll.