Pay periods: Differences and benefits
Choosing the right pay schedule is a crucial decision for any organization. The right pay schedule will benefit both you and your employees.
Before going further in on your pay schedule, here are some factors that you must consider while evaluating your options.
For US based companies, State-based laws might restrict you to only certain types of pay schedules for your employees.
Organizers incur costs when processing payroll, so it is best to choose the method that is most cost-effective for your budget..
Some pay schedules can make overtime calculations challenging. Choose the type of pay period that gives the most benefits to your employees.
Bi-weekly vs semi-monthly pay schedules
The terms 'bi-weekly' and 'semi-monthly' are often mistaken for one another, so let's break down the differences.
Due to some US state laws, biweekly pay schedules are common in the United States. This is called 'Fortnightly' in Australia and other countries. This pay schedule pays your employee once every two weeks on a designated day. This means you would pay your employees 26 times a year.
Semi-monthly pay schedule means that payment takes place twice a month, such as on the 1st and 15th or on the 15th and 30th of each month.
However, te pay schedule may not necessarily fall on the same day of the week, so your employees would be paid 24 times in a year instead of 26.
Here are some of the benefits of bi-weekly and semi-monthly pay schedules so you can make an informed decision on which is right for you.
Other pay schedules
Before finalizing the payroll schedule that best suits you, you may also consider some other types of payroll schedules.
In a monthly pay schedule, payroll is processed 12 times a year on a fixed recurring date. Though it is the most cost-effective option for employers, employees are forced to wait a whole month to receive each pay check.
Weekly pay schedules require 52 payments to be processed over a year, making it the most expensive and time-consuming pay cycle / period for employers.
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