How do you post biweekly payroll?

Question

How do you correctly show a montly cost for biweekly payroll? For example, we had 3 pay "days" in August: 8/2, 8/16 & 8/30. However, the pay periods for these dates were: 7/16-7/29, 7/30-8/12, 8/13-8/26. Do I need to make some kind of adjustment to apply 16 of those paid days into July? This will show our payroll as being high 2 months out of the year because of the extra pay week (26 periods instead of 2 per month at 24), and with a newer business I would thing it would be more critical to be a little more accurate. Any suggestions?

This is purely coming from a standpoint of looking at financial statements. If we have 10 employees, each with 80 hours per pay period, one month will show 1600 hours (80hrs x 2 periods x 10 employees), but the next will show 2400 hours -- this makes it look like we had a higher payroll expense, but it's not true!!

This a fairly new business, and we want to look at our month-to-month expenses as accurately as possible.

Answer 1

It really won't matter on your financial statements. No one looks at financial statements based on a monthly basis. But if you post your payroll on the days the time was worked, you can run financial statements on an Accrual Basis rather than a Cash Basis and they will show up. But again, it really doesn't matter. Anyone looking at your financial statements (such as bank or bonding company, etc.) will be looking at yearly or possibly semi-yearly statements.

Answer 2

Multiply the bi-weekly rate by 2.17

Ex.: If the bi-weekly pay was 1000...the weekly pay was 500.
Multiply 500 X 52 (weeks in a year), and then divide by 12 (months in the year).


Dividing by 2, multiplying by 52 and dividing by 12 is the same as multiplying by 2.17.