Biweekly schedules are the most common payroll schedule, according to a 2018 QuickBooks Payroll report. Your employees work very hard for you and put in a lot of time and effort in the job given to them. They expect timely payments to be made so that they can handle their household expenses and also save something for their future.
When discussing the semi-monthly vs bi-weekly payroll, it is important to check the pros and cons of the biweekly pay period as well. As per the semi-monthly schedule, the employees get 24 checks in a year. Since the number of days in a month varies, some pay checks may be smaller or larger than the others. For instance, in the month of February, the second paycheck would cover only 13 or 14 days when in the rest of the months, it covers 15 or 16 days. Depending on whether you are a salaried, permanent employee, the total yearly salary may be divided into 24 checks by the employer.
Types of payroll schedules
Those kinds of issues go away if you are using the semimonthly pay because the employees have a regular schedule of payroll. Usually, companies pay their employees on the 15th and last business day of the month. If your employees are paid overtime, then you will appreciate having a bi-weekly payment schedule, as overtime shifts will never be split over two pay cycles. If an employee makes $36,000 a year and they are paid semimonthly, they will receive a $1500 check two times a month. The hourly difference occurs because of the distinction in the number of paychecks the employees will receive. For a biweekly employee, you must divide 2,080 by 26 pay periods (every two weeks).
The extra two paychecks for biweekly pay frequencies can set your business back if you don’t properly prepare for months with three paychecks. You will need to make sure you have enough money in your payroll account to cover the additional expenses. Generally speaking, with semimonthly pay schedules, you’re going to find that the processing time for payroll will be slightly less than biweekly pay schedules. Because payroll is run 24 times a year versus 26 times a year, there will be slightly less work for the person in charge of payroll at your company. Payroll processing for biweekly hourly employees is straightforward; however, processing for semimonthly hourly employees can get confusing.
But if you’re using a payroll service for your small business, you may not have to pay extra for every payroll run. Semimonthly and biweekly aren’t the only payroll schedules available. After considering the number of employees working and how many of them are salaried and hourly, the decision of running a semi-monthly payroll must be taken. If an employee is earning $50,000 every year and is getting paid as per a semi-monthly pay schedule, he will get a paycheck of $2,083.33 gross. This amount is derived by dividing fifty thousand dollars by 24 as there are two pay cycles every month. Let us ponder over what is the difference between semi-monthly and biweekly pay periods with the help of an example.
Employees who are paid semi-monthly have higher paychecks than those who are paid every other week since companies who use semi-monthly frequency run payroll less. However, companies who use bi-weekly frequency will provide two additional paychecks to make up the difference. A semimonthly pay has a flexible structure, unlike weekly, biweekly, or monthly pay schedule.
- You may even choose to pay hourly employees biweekly but pay salaried employees semimonthly.
- The difference between a semimonthly and a biweekly payroll is that the semimonthly one is paid 24 times per year, and the biweekly one is paid 26 times per year.
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However, the days of the month vary, and even the number of times per month you get paid can change. A couple of months out of the year, you will get three paychecks as opposed to just two. The number of hourly, salaried, full-time, or part-time employees you have may influence your decision. Consider which employees make up the majority of your payroll before you choose your process. You may even choose to pay hourly employees biweekly but pay salaried employees semimonthly. Typically, semimonthly payroll schedules work best for salaried workers.
Biweekly vs. Semi monthly Payroll
Semi-Monthly basically means the payment is made and received twice a month. Typically, it occurs on fixed days like the 1st, 15th, or 30th of the month. As you can see, accurate record keeping is a crucial step for employers who use a semi-monthly pay frequency for their non-exempt employees. We recommend employers use an electronic time and attendance tracking system in order to properly record and pay overtime.
Usually, the employers distribute pay checks on Fridays sticking to the same day every pay week. Thus, in this pay period, the employee receives 26 pay checks annually. If an employee earns a fixed amount or is salaried, the pay check received will be of the same amount every time it is received. In the case of hourly pay, the amount in the paycheck may differ as it will be as per the number of hours worked in that specific pay cycle. For example, when you pay employees semimonthly, you can count on paying the same amount to employees each month.
The holidays and weekends coming into the play also create confusion about the payday. In case of holidays or weekends, the payment needs to be done in advance or delayed. This not only creates a lot of confusion but also disheartens the employees. There are a lot of differences between semi-monthly pay and biweekly pay and deciding which is better biweekly or semi-monthly pay, is slightly challenging. We recommend you take the three key differences and pros and cons between semi-monthly vs bi-weekly payroll when making your decision. Because semi-monthly pay is on two solid days per month, it can be inconvenient when holidays occur.
If payday falls on a holiday or weekend, you will either need to advance or delay payroll, adding another responsibility to your plate. Because you must run payroll on a different day of the week, you could lose track of your responsibility. Some organizations settle upon a combination of payrolls, using the semimonthly approach for salaried workers and a biweekly payroll for hourly employees. From an efficiency perspective, the main point is to avoid weekly payrolls in favor of either of the methods presented here, thereby cutting the total number of payrolls in half. While it may be true that biweekly payroll is the most common pay cycle, how do you know if it’s right for your company? There are a number of factors to consider, including your company’s industry and average wages.
- Since there are 52 weeks in a year, employees are paid 26 times in a year.
- Another difference between semimonthly pay vs. biweekly pay is what day of the week you run payroll and which day employees receive their paychecks.
- Biweekly employees usually receive 26 paychecks per year; semimonthly employees receive 24.
- A biweekly payroll schedule will typically be seen in the eyes of your employees as “dependable” and “consistent”.
Another difference between semimonthly vs. biweekly pay is what day of the week you run payroll and which day employees receive their paychecks. While choosing one of the latter options might be easier for your HR administrators to handle, it asks a lot from employees to budget for an entire month in advance. In other words, more frequent paydays can help make it easier to pay the bills.
If a payday falls on a federal holiday, or weekend, the payday will need to be pushed up. A bi-weekly pay schedule also means consistency in the days of the week you are paid, which can make certain financial situations a little bit easier. A bi-weekly pay schedule usually means Semimonthly vs biweekly your paycheck comes every other Friday (or whatever day of the week your payroll is issued). Before deciding, always remember that states control how often you must pay employees. Check with your state since in some particular states you can’t use semi-monthly pay frequency.
Semi-Monthly Pay vs. Bi-Weekly: Understanding the Difference
In the most practical terms, that means employees who are paid bi-weekly receive more paychecks than employees who are paid semi-monthly. This is an important consideration for workers who would rather get paid more often. If you’re looking for more, we created this handy table showing the pay dates for bi-weekly and bi-monthly pay. When a semimonthly payroll is used, processing steps constantly shift around among different days of the week, since the pay date is not fixed on a specific day of the week. Twice each year, employees who are paid bi-weekly receive a third monthly paycheck, increasing their take home pay for the month.
When employees are paid on a semimonthly basis, they’re paid twice a month regardless of how many weeks there are. That means 24 pay periods per year, or two less than under the biweekly payroll model. This additional variability has made the semimonthly approach less popular with U.S. employers, with less than 20 percent opting to use it. If you get to choose a payroll schedule, it’s important to consider all angles before deciding for your small business.
Biweekly vs. Semimonthly: Paychecks Per Year
Its structure allows the salary expenses to be adjusted easily into the expected budget. If you would like to discuss the differences between a semi-monthly and bi-weekly payment schedule and how to switch from one to the other, Ignite HCM is a great option. We’ve payroll experts and work with businesses of all sizes, and industries. For example, paychecks in February will only cover 13 or 14 days, so they will be smaller. Of course, if your employee is salaried or has an annual salary, you can divide their pay equally between the 24 payments, so they get the same payment every single time.
Choose from our comprehensive and flexible employee benefits programs. This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. We write only in-depth, original content with an intention to help business owners grow. You will have to consider all the advantages mentioned above, and then have a serious conversation with your HR team to see what they prefer.
For example, it can be more difficult to process the paychecks of hourly employees on a semi-monthly basis than on a bi-weekly basis. Because hourly wages are easier to calculate on a bi-weekly basis, as each paycheck accounts for the same number of days. Conversely, semi-monthly paychecks will vary in the number of days they include, making it more challenging for whoever handles the company’s payroll. Because each month contains a little more than four weeks, twice a year employees will actually receive three paychecks a month.