Before you begin running your payroll, it’s crucial you choose a payment schedule. Your pay schedule determines the length of your pay period and how often you pay your employees. Thus, having a pay schedule will ensure your employees are always getting paid on time and accurately. However, choosing a payment schedule isn’t always as simple as it may seem. When you choose your payment schedule, you should consider factors such as how many employees you have, the needs of your business, and your yearly budget.
There are four common pay schedule options, including weekly, biweekly, semi-monthly, and monthly. Oftentimes, there is confusion when it comes to understanding biweekly and semi-monthly payroll schedules because they seem very similar. In both of these pay schedules, employees generally receive two payments per month, however, there are several minor differences that are important to note.
Figuring out which pay schedule would be best for your business is an important decision that can involve many different factors. If you are having trouble deciding whether a biweekly or semi-monthly pay schedule would be best for your business, here’s a helpful overview of both pay schedules:
Biweekly Pay Schedules
When you pay employees every other week, it is considered bi-weekly pay. If you operate on a biweekly pay schedule, your employees will receive their paychecks on the same day each pay period. Typically, employers choose to pay employees every other Friday.
With a biweekly pay schedule, employees will receive a total of 26 checks per year. Most months have two pay periods, but two months of the year will have three. Since payroll on a biweekly pay schedule processes more frequently than it does on a semi-monthly pay schedule, these paycheck amounts are smaller. However, employees receive two extra paychecks per year to make up for it.
A biweekly pay schedule is typically best for hourly employees. Biweekly payroll makes it easy to calculate employee overtime pay, which hourly employees receive. Biweekly pay schedules offer consistency in that your employees will always get paid on the same day every other week. However, if you are running payroll for hourly employees, the amount they are paid will typically differ each payday. Thus, it is important you pay close attention to your employee’s hours and enter the correct information into their pay stubs.
Semi-Monthly Pay Schedules
Under a semi-monthly pay schedule, employees are consistently paid twice per month. The specific dates that employees get paid each month will always stay the same but the actual “payday” will vary. Employers typically choose the 1st and 15th or 15th and 30th of each month to pay employees semi-monthly. As a result, the days of the week an employee gets paid will differ.
This payroll schedule requires you to pay employees consistently 24 times per year. Considering payroll is processed fewer times in a semi-monthly pay schedule, employees’ paychecks will be greater. Processing your payroll less also means you will reduce the amount of time and work that goes into running your payroll each year.
Typically, semi-monthly pay schedules work best for salaried employees because you can count on paying the same amount to employees each month. However, semi-monthly pay schedules lack consistency when it comes to what days your employees will be paid. It could become difficult to keep track of the specific day you need to run your payroll and also take into consideration weekends and holidays. If payday falls on a holiday or weekend, you will either need to advance or delay your payroll.
Creating Pay Stubs
Whether you choose a biweekly or semi-monthly pay schedule, providing your employees with pay stubs is necessary. Having a determined pay schedule will help make the payroll process and creating pay stubs for your employees easier. Using an online pay stub generator to create your pay stubs can save you lots of time during the payroll process.
Online pay stub generators, help ensure your pay stubs are accurate by providing automatic tax calculations and unlimited error corrections. When you use an online pay stub generator, all you need to do is fill out the required information and the pay stub generator will handle all of the calculations and deductions for you.
123PayStubs is an easy-to-use online pay stub generator that will have you creating quality pay stubs effectively and efficiently. 123PayStubs offers free pay stub templates that you can customize to fits the exact needs of your business. Paying both contractors/employees and hourly/salary employees is easy with 123paystubs.
Creating pay stubs online with 123paystubs is simple and straightforward. Follow these steps to create professional pay stubs with ease:
Enter – Fill in the required information (company details, employee details, pay schedule info, etc.)
Preview – Choose your template, review the information you provided, and make any corrections
Download and print your PayStubs! You can even email them directly to your employee or contractor.