Semimonthly vs biweekly: Semi-Monthly vs BI-Weekly Payroll: Whats the Difference?

Semimonthly vs biweekly

You may need to specify that the pay period ends earlier for semi-monthly payments than biweekly payments. You may even want to issue your employees a payment calendar so that they understand which pay period their paycheck is covering. Full-time salaried employees are typically paid for 2,080 work hours yearly, and this must be delivered to employees regardless of the pay frequency. The difference is that full-time biweekly salaried employees will be paid for 80 hours each payday.

Semimonthly vs biweekly

This constant change in payment day means that payments may occur during a holiday, a Saturday, or even a Sunday. Should this be the case, most of the time, employees will automatically receive their payment on the last working day before the holiday or weekend. While a business may prefer one pay schedule over another, it’s important to note that some state laws dictate the types of payment schedules companies are allowed to implement.

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. According to the Bureau of Labor Statistics, 36.5% of employees are paid biweekly. On the other hand, only 19.8% of employees are paid using the semimonthly payroll frequency.

State law will typically specify the time frame within which employees must legally get paid. That doesn’t mean, however, that you can’t pay your employees more frequently; the time frame that State law specifies serves as a minimum. Bi-weekly pay for an hourly employee is calculated by multiplying their hourly rate by the number of hours worked in a two-week period. For example, an employee who earns $20 per hour and works 60 hours every two weeks will earn $1,200 on a bi-weekly basis.

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Some employers pay hourly semimonthly employees current (for 86.67 hours) and estimate overtime then they make adjustments on the next pay period. With a biweekly pay schedule, there are two months in the year where employees receive three paychecks. Employees who are paid semimonthly always receive two paychecks per month. Companies that run payroll with a biweekly frequency dole out a total of 26 paychecks per year. Companies that use semimonthly pay give employees 24 paychecks per year. You need to consider how many employees you have and whether those employees are hourly or salaried.

Some employees may choose to pay hourly semi-monthly employees for 86.67 hours, and then make adjustments on the next pay period. This, however, can be risky; for example, if an employee leaves your company without making adjustments, they will not pay back the estimated hours. It should be avoided as much as possible to prevent such mistakes from happening. Bi-weekly payment is where employees are paid on a specific day of the week, every two weeks.

The difference between semimonthly and biweekly payroll

It can be easy to confuse bi-weekly and semi-monthly payroll schedules, however, the key difference between the two lies in how often payment occurs. This knowledge and understanding are advantageous for the business as a payment schedule can be chosen that is to its best advantage. Employees are also in a position to anticipate how much amount can be received in every paycheck.

For example, in Alabama and South Carolina, there are no specified regulations, so companies can choose whichever schedule they prefer. In other states, however, companies are required to pay their employees at least on a bi-weekly basis. According to the Bureau of Labor Statistics, 36.5 percent of employees are paid biweekly. In this case, employees with direct deposit generally receive payment on the preceding business day. Biweekly employees usually receive 26 paychecks per year; semimonthly employees receive 24.

If the chosen payday is Friday, employees will receive their paychecks every other Friday, totaling 26 paychecks for the year. Because the payroll is processed fewer times for semimonthly frequencies than biweekly, employees’ paychecks will be greater. Biweekly paychecks will be be for less money, but employees will receive the two additional paychecks to make up the difference. Payroll processing for biweekly salaried employees differs from processing for semimonthly salaried employees. Full-time biweekly salaried employees are generally paid 80 hours each payday while semimonthly employees receive 86.67 hours.

  • Depending on the choice made between the two, the budget of a company is impacted.
  • A biweekly payroll schedule pays employees 26 cheques per year every second week, usually on a Friday.
  • Some organizations settle upon a combination of payrolls, using the semimonthly approach for salaried workers and a biweekly payroll for hourly employees.
  • Two popular, yet easily confused, pay periods are biweekly and semimonthly.

A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media. Following a semi-monthly pay-schedule has its own advantages and benefits. Rachel Blakely-Gray is a writer for Patriot Software, a provider of payroll and human resources management solutions for small businesses. Get up and running with free payroll setup, and enjoy free expert support.

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For obvious reasons, paying your hourly staff biweekly makes it a much easier and less troublesome way to calculate your employee payment amounts. Remember, a semi-monthly payroll requires less processing, as it happens 24 times a year rather than 26 times a year, and so can save the company money. Moreover, calculating the salary for hourly biweekly employees is the easiest payroll process.

Now that you’ve determined which payroll frequency is right for you, it’s time to compare service options. Payroll is one of the most important aspects of running your business, yet shopping for payroll services can be confusing. A notable benefit of semi-monthly pay is that it aligns with the business’ cycle. Since employees get paid around the same time as the business makes money, it is easier to pay them on time. Bi-weekly and semi-monthly pay are similar, but there are three key differences. When it comes to the way that your company handles payroll, you might find that there are various options available for you.

Typically, it occurs on fixed days like the 1st, 15th, or 30th of the month. Also, keep in mind that some payroll providers charge you each time you run payroll. If you use one of these providers, you will pay more per year to run biweekly as opposed to semimonthly payroll. Or, you could choose a provider, like Patriot Software, that charges you the same amount, regardless of how many times you run payroll. Deciding between biweekly vs. semimonthly payroll can be a difficult decision, especially because federal pay laws state that you must keep the same frequency throughout the year. Knowing the difference between biweekly vs. semimonthly payroll can prevent financial setbacks, keep your business legally compliant, and more.

For example, if an organization pays based on the previous period like the 16th to the end of the month. Then, if an employee starts on the 1st, they wouldn’t be paid until the end of the month. Either way, the full paycheck will be delayed for many new employees on a semi-monthly payroll cycle. Yet each payment schedule has some key differences and choosing the right one is crucial. So let’s dive deeper into the differences between Semi-Monthly vs Bi-Weekly Payroll. A bi-weekly payroll schedule may work better for some businesses than others.

Although your total annual earnings will be $42,000 with either option, this is definitely a factor that is worth noting — especially when you’re creating your monthly budget. 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 a payday falls on a federal holiday, or weekend, the payday will need to be pushed up. Semi-Monthly basically means the payment is made and received twice a month.

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Paying your salaried workers biweekly is tricky when you have to stop and factor in leap years. Over the course of years, the extra day in a leap year will have to be accumulated and added onto an extra paycheck. In this case, 26 times a year payments will become 27 times, adding additional costs to payroll processing. Semi-monthly payroll will always and only ever happen 24 times in a year. To make payroll processes and employees’ lives easier, some employers will choose to pay both their hourly and salaried employees biweekly.

It is also possible for employers to change their payday to a different day or change how often they pay their employees. Now, if we discuss the biweekly pay schedule, the employee earning $50,000 yearly will get his pay divided across 26 pay cycles. Thus, each paycheck will be $1,923.08 before deductions every other week. The amount may seem to be less but then the employee is also getting two additional pay checks in a year. Getting two additional checks results in extra savings and better management of various expenses.