Bi-monthly payroll verses bi-weekly?

Question

our company is composed of 7 people and we currently are on a bi-monthly payroll. We are all salary employees.

what do most companies do?

the employees want us to follow a bi-weekly.

anyone have any advise on the pros and cons of having bi-monthly or bi-weekly.

Thanks

Answer 1

As an employee, once I got used to biweekly, I love it.

You do have to learn to live on 2 paychecks a month, so it starts out as a "pay cut."  Then #13 shows up in the summer and #26 shows up at Christmas.  Instant savings.

Answer 2

The majority of companies pay bi-weekly unless they are in the construction of other blue collar industry. Most employees much prefer this to the semi-monthly. Blue collar employees are much more likely to pay on a weekly basis.

Greg

www.solutionshr.com

Answer 3

Bi-monthly means you get paid every 2 months, just like bi-weekly means you get paid every 2 weeks.

SEMI-monthly means you get paid twice a month.

The biggest problem that I've encountered with bi-weekly instead of semi-monthly or monthly is when it comes to accruing vacation/sick days or deducting for insurance.  When you pay every other week, SOMEBODY always gripes that they lost vacation hours or that you withheld too much insurance.  They don't understand that in a bi-weekly payroll, you take the yearly totals and divide by 26.  So in the months when you get 3 paychecks, you will also have insurance deducted 3 times.  If you pay semi-monthly, they tend to understand the math a bit better.

If you pay bi-weekly, you'll need to check with your CPA to see if you need to do an adjusting entry on your books at the end of your fiscal year and also at the calendar year to accrue for hours worked that haven't been paid yet.  Quite honestly, with only 7 employees, figuring the entry isn't that difficult or that time-consuming.  And you also have the option of NOT making the entry, since the dollar amount is probably immaterial, but then you have to be consistent every year after.  So whoever does your books internally needs to keep good notes on what has to be done at year-end and what ISN'T supposed to be done.

Those are the only 2 drawbacks from my view as the person responsible for doing payroll.  Be sure to ask your CPA if he has any thoughts on one versus the other.  But really, it's up to the owners to decide how often they want to pay employees.  It doesn't matter whether you pay them once a week, every other week, twice a month, or once a month, somebody is going to decide they don't like it that way and they'll ask you to consider changing it again.  

From the processing standpoint and the quarterly/yearly tax reports, it makes no difference at all which way you pay.