When you are looking for a new job, one of the first items you check is how much you will get paid. You may not consider how often your paycheck will come, but it is an extremely important aspect of budgeting and job transition. In most places, state law dictates how often you must be paid at a minimum, but companies are able to pay more frequently if they would like. So, what are the most common types of pay schedules and what do they mean? Read more to find out.
Biweekly is the other most common pay schedule. When employees are paid biweekly, they are paid every other week, usually on a Friday. This means there are usually 26 pay periods in a year, but sometimes 27 depending on how many Fridays there are that year. This also means that there are some months that employees are paid 3 times per month. Hourly employees like being paid biweekly, because it allows them to accurately calculate overtime each week.
Semi-monthly is one of the most common pay schedules. Employees are paid two times per month, or 24 times per year, usually on either the 1st and the 15th of every month, or the 15th and the last day of the month. This method is usually preferred by accountants over the biweekly schedule because it makes monthly voluntary deductions easier. Semi-monthly pay periods for hourly employees can get tricky because there are 86.67 hours in a typical pay period, making overtime complicated.
If you are paid on a monthly basis, you are paid once a month. Your pay date is usually at the end of the month, and you are paid 12 times per year. This pay structure is usually the least preferred among hourly employees. However, it is the least-costly option for businesses, because usually businesses pay each time payroll is run.
Weekly payroll is most popular in trade fields, like electricians, auto repair technicians, plumbers, etc. This allows employees to be paid on exactly how many hours they worked per week, as it usually varies. This option is the least attractive to employers, because payroll usually costs money each time it is run. It also can complicate things like payroll accruals and overtime.
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These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.