What is the difference between biweekly and semimonthly payroll?

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. Semi-monthly payroll is a payment plan that pays employees twice a month, generally on the 15th and final day of the month. This sort of payroll plan differs from a biweekly payroll schedule, in which employees are paid every two weeks.

Then, if an employee starts on the 1st, they wouldn’t be paid until the end of the month. Others may choose to pay for the hours worked currently until the 15th. Either way, the full paycheck will be delayed for many new employees on a semi-monthly payroll cycle. In semi-monthly frequencies, payroll is processed fewer times than biweekly, so employees’ paychecks are larger. Furthermore, biweekly paychecks are smaller, but employees will receive two extra paychecks to make up the difference.

How does this change impact pay and insurance premiums for 9-month faculty and graduate

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. You need to consider how many employees you have and whether those employees are hourly or salaried.

Firms should consider their employees’ requirements and preferences while picking a payroll system. A emi-monthly payroll is a system where employees are paid twice a month, usually on the 15th and final day of the month. Employers may benefit from this strategy since it streamlines the payroll process and decreases the possibility of mistakes. Employees are expected to work a certain amount of hours throughout a pay period, and their earnings or salaries are computed based on their hourly rate or yearly income. The employee gets paid the amount earned during the pay period on the specified payday. Now that you’ve determined which payroll frequency is right for you, it’s time to compare service options.

Relax—pay employees in just 3 steps with Patriot Payroll!

If a user or application submits more than 10 requests per second, further requests from the IP address(es) may be limited for a brief period. Once the rate of requests has dropped below the threshold for 10 minutes, the user may resume accessing content on SEC.gov. This SEC practice is designed to limit excessive automated searches on SEC.gov and is not intended or expected to impact individuals browsing the SEC.gov website. Help support Wordnik (and make this page ad-free) by adopting the word semimonthly.

• You need to consider how many employees you have and whether those employees are hourly or salaried.
• We reserve the right to block IP addresses that submit excessive requests.
• Now let’s assume that another company pays its employees semimonthly on the 15th day and the last day of every month.
• If payday falls on a holiday or weekend, you will either need to advance or delay payroll, adding another responsibility to your plate.

These payments contains precise estimations of hours worked, overtime, and other earnings, relevant taxes and withholdings, social security and medicare taxes, etc. Payroll is nothing but a set compensation paid to the employees for the job done over the agreed period. Compensation can be in the form of wages, salaries after considering taxes and other deductions. The payroll process is essential to ensure that employees are paid fairly on time, and comply with the many tax and compensation rules and regulations.

Choosing between semimonthly vs. biweekly payroll

In addition to the cost savings, semi-monthly pay makes it easier for businesses to calculate tax and benefits deductions. They pay their employees on the 15th and final day of each month using a semi-monthly payroll method. The lack of consistency with accounting technology payroll can also be a turnoff for some businesses and employees. Because you must run payroll on a different day of the week, you could lose track of your responsibility.

Bi-Weekly pay is when employees are paid every other week on a specific day. For example, a bi-weekly pay frequency on a Thursday would mean employees get paid every other Thursday of the month. With bi-weekly payroll, employees are paid 26 paychecks a year, compared to 24 like bi-monthly receives. 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. Receiving up to two additional paychecks per month compared to a semi-monthly pay schedule is certainly a bonus for employees. For months where additional planning was not put in place, a small business may not have sufficient funds for a three paycheck month compared to a two paycheck month.

Paycheck amounts

Let’s assume that a company pays its employees biweekly on every other Friday. If a new employee agrees to an annual salary of $52,000 the employee will be earning $2,000 ($52,000 divided by 26 paydays) during each biweekly pay period. The employee’s pay records will indicate a gross salary of $2,000 each biweekly payday. A biweekly payroll pays employees every two weeks, whereas a semi-monthly payroll pays staff twice a month. This means semi-monthly payroll employees may receive somewhat varied pay amounts each pay period, whereas biweekly payroll employees receive the same amount every other week. 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.

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. According to the Bureau of Labor Statistics, 36.5 percent of employees are paid biweekly.

Suppose an employee’s gross pay is $2,000 for the two weeks from the 1st to the 14th of the month. Let’s say you have 10 employees who each earn $1,500 in gross wages per paycheck. You will need to have an additional $15,000 on hand both months that have three paychecks in them. Because semi-monthly and bi-weekly payroll are two of the most popular payroll frequencies, choosing between them will be difficult. Take a look at the differences, pros, cons, and statistics between the two to help narrow down your choice. From an efficiency perspective, the semimonthly payroll is preferable, since there are two fewer payrolls per year to prepare.