Bi-weekly Schedule; Benefits And Challenges

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As a business owner who plans on having employees, a pay schedule should be on your checklist for the business. It is important to know the type of pay period suitable for you and your finances. Structuring your pay period can help you maintain compliance with tax and labor laws and consistently meet payroll obligations.  

Maintaining a pay schedule seamlessly is possible with the right paystub maker like Real Check Stubs. You can keep tabs on employees’ hours, deductions, taxes, and accurately calculate net income automatically. 

What Is A Pay period?

Pay period is the duration between one pay date to the next. 

What Is The Different Pay Period?

TypesFrequencyPaycheck
per year
WeeklyOnce a week on a specific day of the week,
e.g., Payment every Friday
52 
Bi-weeklyEvery two weeks on a specific day of the week,
e.g., Payment on other Friday. 
26 
Semi-monthlyTwice a month on two specific days of the month,
e.g., 15th and 30th 
24
MonthlyOnce a month on a specific, recurring date,
e.g., the 1st of every month
12

The Bi-weekly Schedule

Typically, a bi-weekly payment schedule pays on a set day every other week. As a business grows, employers tend to adopt this pay schedule.

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According to research, 42% of private businesses opt to pay their employees every two weeks, and 70% of businesses with more than 1000 employees pay on a bi-week schedule. 

Benefits

There are several benefits of bi-weekly payrolls:

  • Bi-weekly payrolls allow consistency- This consistent payday is appealing to employees as there will be 3 paydays in certain months. 
  • Bi-weekly is favorable to employees to adjust their finances and plan for surprise expenses and unfortunate scenarios.
  • Easy to calculate overtime for hourly employees – as each consecutive seven-day period can be aligned with the workweek and overtime calculated on that basis.
  • More paystubs mean an employee can pay down their credit twice rather than once a month. 
  • Being paid bi-weekly also makes it easier for employees to manage their finances. Most employees use the first half of their check to handle their monthly bills and half of the second paycheck for disposable expenditures.
  • Easy to calculate overtime during holidays, paid time off and sick time. 
  • Paying bi-weekly as an organization helps you plan ahead for the next week. 
  • Bi-weekly payroll allows businesses more time to adjust their finances to prepare for payroll. This is especially important when running a capital-intensive business. 

Challenges

At the same time, there are some nuances of such a wage schedule for employees at the enterprise:

  • There is difficulty in managing benefit deductions because benefits occur on a monthly basis. Your business will have to manage benefits based on the total number of annual pay periods(26) instead of monthly.
  • Some months have 3-day period instead of 2 day period, which can make it difficult for accounting to manage benefits deductions and expenses accruals. 
  • It is more of a burden for the payroll department to calculate payroll twice. This is especially true if the payroll department consists of only one person like most small businesses. A paystub maker would assist in speeding up the creation of new paystubs and save a ton of time. 
  • Employees tend to make bad financial decisions because of the consistency of bi-weekly pay schedules. 
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If you plan to adopt a bi-weekly schedule, it is suggested to utilize Real Check Stubs to automate employee payroll calculation easily and accurately. 

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Weekly

The weekly schedule is one of the most popular schedules. There are many employees who will not take a position if it does not pay weekly. While the weekly schedule can be great for the employee in terms of convenience and consistent cash flow, the weekly schedule can prove harmful to a business’s finances. 

The issue is that the business will have expenses rolling in at the same time as the payroll for employees are due. Most small businesses do not have the same financial runway that larger businesses have and that are able to sustain weekly pay. 

Another thing to factor in with weekly pay is that your business may require a working capital loan to cover the weekly payroll budget. A working capital loan is a short-term loan that provides businesses with funds to cover common expenses like payroll but like any loan, it is required to be paid back in full. The good thing is that most banks will give you a working capital loan in the form of a line of credit.

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