The key to a happy and productive team is ensuring that your employees get paid correctly and on time. Companies select a payment schedule to guarantee that payments are streamlined each month and payroll processing functions without glitches and errors. Picking an optimum system in conjunction with a paystub generator free (or paid) is a prime step toward regulating your payroll management.
Selecting the perfect payment schedule for your business is a crucial decision. It affects the effort of payroll management and also impacts your resources. Not only that, but it can change the levels of employee satisfaction and the approach you take to filing your taxes. Let us understand more about payment schedules and discuss the nuances of two of the most popular ones – bi-weekly and bi-monthly.
What is a Payment Schedule?
The payment schedule you choose for your business decides the length of the pay period for your employees. It determines how frequently your employees will get paid. Popular routines include weekly, bi-weekly, monthly, and semi-monthly. It is wise to assess your employee base, the specific needs of your organization, and your budget before zeroing down on a payment schedule.
Main Differences in Bi-Monthly and Bi-Weekly Payment
Below we discuss the prime differences between these two commonly used payment schedules:
1. Number of checks
If you follow a bi-monthly routine, your employees will get paid 24 times every year. However, industries that use a bi-weekly mode will pay their staffers 26 checks per year. Most months have two pay periods (one every other week), but some have three, thus bringing the total to 26.
2. Amount per paycheck
Employees who get paid bi-weekly receive smaller checks than those on a bi-monthly system. It is because processing every other week tends to be more frequent. Note that bi-weekly employees will also receive more paychecks than bi-monthly ones – 26 as opposed to 24.
3. Calculating overtime pay
If any of your employees do overtime, this calculation will be a big part of your payroll processing. If you use a bi-weekly schedule, this calculation becomes simple. It is because overtime typically applies to employees who receive hourly payment. While generating paystubs, you must ensure to enter overtime pay as it becomes part of an employee’s earnings. If you use a free check stub maker with calculator, you will simplify the task and reduce the probability of errors.
4. Consistency of payment
A bi-weekly system offers better consistency in payment as an employee gets his paycheck on the same day every other week. For instance, you might choose to issue a paycheck every other Monday. However, if you use a bi-monthly routine, the day is subject to change. If a payday falls on a bank holiday, your employees will not get their checks. You will have to implement a policy that clarifies the payment terms in this scenario, such as completing the task one day before.
5. Cost of payroll runs
If you have outsourced your payroll management to a provider that charges for each payroll run, you will end up paying more for a bi-weekly schedule. It involves more runs than a bi-monthly system. It is why several companies prefer to employ a provider that permits as many runs as needed without charging for individual iterations.
6. Effort of payroll processing
A bi-monthly schedule will let you get by with fewer payroll processing runs. It reduces the effort and time you will have to put into payroll management, from calculating payment and generating paystubs to disbursing records across the organization. The investment for bi-weekly payroll is higher. In both cases, using an online paystub generator can make your life easier. StubCheck.com offers both regular and enhanced checkstub templates and runs all the background calculations as per updated norms. It is a handy way to minimize the chances of errors creeping into your records, especially when overtime pay, vacation pay, etc., are involved.
7. Suitability for all employees
Companies that have many salaried employees often prefer to use a semi-monthly payment system. It helps regulate the total amount you will pay your employees month on month. But if your team comprises many hourly employees, a bi-weekly routine will suit you better. It is why industries like education and healthcare often use this system to account for hourly team members. Popularity-wise, also, bi-weekly is the preferred mode by many businesses in the US.
Payroll processing is a significant component of every business, affecting your employee satisfaction and, in the long run, attrition/retention rates. Getting paid on time (and correctly) plays a vital role in keeping an employee happy in the workplace. Choosing a bi-weekly or semi-monthly payment routine is preferable to running a weekly payroll. Both the modes have their benefits and shortcomings. Choosing one will be a factor of the industry in which you operate and your employee base.