Businesses consider various factors that help them to decide between the two options. It is prudent to go through the pros and cons of both options, weigh both of them, and then, finally decide which payroll options are best suited for their purposes. Whether a person is a non-salaried full-time employee, the same figures hold true. The only difference between bi-monthly and semi-monthly pay periods is that each paycheck amount gets adjusted including time off or overtime took in a specific pay cycle. 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.
Except on vacations, they can obtain their checks every 2 weeks on the same day. Rachel Blakely-Gray is a writer for Patriot Software, a provider of payroll and human resources management solutions for small businesses. Our services cover all aspects Semimonthly vs biweekly of your payroll process and payroll tax needs. The Merriam-Webster dictionary defines ‘bi-weekly’ as occurring every two weeks or occurring twice a week. When you’re job hunting, it can seem like there’s a whole ocean of information to consider.
Trick to Remember the Difference
Workers that are paid semimonthly receive 24 paychecks per year. When an employer elects for a weekly pay schedule, employees get paid once per week, for example every Friday. Under a monthly pay schedule, employees will get paid once per month, typically on the 1st of the month. The distinction between the two is important because not all months have the same number of days.
In addition, a biweekly publication is issued every two weeks and a bimonthly publication is issued every two months. Carefully evaluate the impact each pay schedule will have on your finances, time, and effort. Finally, select the pay schedule that makes the most sense to you. Before finalizing the payroll schedule that best suits you, you may also consider some other types of payroll schedules. That means that tracking your hours is a bit more complex, and you can’t count on the paycheck always being the same each month, even if your number of hours is consistent. A semimonthly would be a great choice for an entrepreneur who wants to put the same amount of money into their payroll each month.
Pay schedule differences for hourly employees
Employers pay employees more frequently, and payday is on the same day of the week. If you run a biweekly payroll, employees receive their wages the same day each pay period. For example, your employees are consistently paid every other Friday, so you run payroll on the same day each pay period.
- Employers pay employees on the number of hours they worked in the previous two-week period.
- Also, they get paid consistently on a particular day of the week, for example, every other Thursday, rather than a random day of the week.
- Typically, semimonthly payroll schedules work best for salaried workers.
- This method is preferred by companies who pay their employees on an hourly basis and need to keep a reliable payment schedule.
In a biweekly pay period or schedule, the employee is set to receive a paycheck every other week. 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.
Cons of running a biweekly payroll
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. The biweekly payment schedule guarantees one payment every two weeks distributed on the same day of the week (Friday in most cases). Since there are 52 weeks in a year, employees on the biweekly scheme would receive a total of 26 paychecks.
Thus, businesses must arrive at a decision that is mutually beneficial for both of them. Choose a pay period that is beneficial for the employee, employer, and the business. 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. Let us ponder over what is the difference between semi-monthly and biweekly pay periods with the help of an example. 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.
Semi-Monthly vs. Bi-Weekly Pay Explained
While these are all important aspects of job searching, you should also think about your possible pay schedule. After all, how often you get paid can have a serious impact on how you budget your finances, save money, and plan for the future. 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. Here is a detailed bi-weekly vs semi-monthly pay differentiation. Biweekly, or more rarely fortnightly, means every two weeks, which works out to 26 paychecks per year.
In this case, payroll gets processed on a different weekday, the employee who is running payroll seems to lose track of this responsibility. 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.
On this schedule, employers pay employees less frequently, and paydays are inconsistent. And determining your pay frequency can impact your business’s financial health. With that in mind, here’s what you need to know to choose a payroll schedule that’s right for your business.
Which equates to reduced employee paychecks and company savings. 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. On the other hand, employees may prefer bi-weekly payroll since they still get paid twice a month but get two extra paychecks per year. Also, they get paid consistently on a particular day of the week, for example, every other Thursday, rather than a random day of the week. After all, semimonthly payrolls are less complicated to track and calculate, thus, requiring fewer resources.
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. For example, biweekly pay schedules may not work on tight budgets during three-paycheck months. And if you outsource your payroll, you may experience more service fees.
Semimonthly vs Biweekly Payroll Differences [Pros & Cons]
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. Employers can divide an employee’s salary by 26, or the number of yearly paydays.
Bi-weekly payroll ensures employees receive their wages the same day every two weeks. Meanwhile, with semi-monthly, the day of the week can change. Semi-monthly payroll goes off of two dates in the month, generally the 1st and the 15th, thus the day it falls on per month can differ. It’s beneficial to understand the difference between a semimonthly and a biweekly payment plan. You can now estimate how much money you’ll get in each paycheck, which will help you budget and plan for the future.
- Though it is the most cost-effective option for employers, employees are forced to wait a whole month to receive each pay check.
- Typically, you may encounter weekly, biweekly, semimonthly, or monthly payment schedules.
- Because semi-monthly pay is on two solid days per month, it can be inconvenient when holidays occur.
- Lack of Certainty- Moreover, there is a lack of certainty for the employees regarding which date they are going to get paid.
However, the amount that you’re paid won’t vary (assuming you work consistent hours), making keeping track of your hours and overtime easier. Because you must run payroll on a different day of the week, you could lose track of your responsibility. With semimonthly payroll, you pay employees on specific dates, such as the 15th and last weekday of each month. Semi-monthly and bi-weekly pay schedules each have their benefits and drawbacks. 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.