Bi-weekly vs Semi-monthly Whats the Difference?

A bimonthly payroll makes monthly expenses more predictable for the company. This predictability can also help estimate other business costs and financial planning. Before choosing, keep in mind that states regulate how often employees must be paid and some states may not allow ceretain pay frequencies. Businesses should check with their state before choosing how often to run payroll.

Biweekly vs. semimonthly payroll: Chart

If you use direct deposit, you might also find your bank charges a deposit fee, which also contributes to more money wasted processing payroll. Tools like AttendanceBot which support both bi-weekly payroll and semi-monthly payroll can help simplify the process. By supporting a range of policies, and integrating with popular platforms like Gusto and BambooHR, AttendanceBot streamlines time tracking and payroll tasks.

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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. According to the Bureau of Labor Statistics, 43% of employees are paid biweekly. On the other hand, only 19% of employees are paid using the semimonthly payroll frequency. When selecting these schedules, the issue of cash flow management is important for organizations, especially small ones.

• Although your payroll team has a dependable day of the week to process payroll, they also have to do it every week.
• Cutting that number down by at least half means a much more efficient payroll operation.
• Companies need to be able to set aside enough cash to pay for these kinds of higher-expense months.
• The flexibility in payday dates accommodates the irregular nature of project timelines, providing a more adaptable approach to compensation.

Get up and running with free payroll setup, and enjoy free expert support. Ensure employees have access to HR or payroll representatives to clarify questions about their first paycheck, deductions, or adjustments to pay schedules. Benefit deductions for semi-monthly pay periods may not align perfectly with bi-weekly systems.

The Four Pay Schedules

This pay schedule is favored by most U.S. companies as it ensures employees are frequently paid without burdening HR teams with excessive admin work. If you run biweekly payroll, employees receive their wages the same day each pay period. Another difference between semimonthly pay vs. biweekly pay is what day of the week you run payroll and which day employees receive their paychecks. Depending on the month, payday may happen on a Saturday, Sunday or holiday. 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.

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. Some employees may choose to pay hourly semi-monthly employees for 86.67 hours, and then make adjustments on the next pay period.

Most months contain three full weeks, as well as enough extra days to bring the total up to 30 or 31 days. The key to this puzzle lies in the meanings of the prefixes semi- and bi-. Not only are you spending more to process payroll, but you also incur more costs on checks if you are still using manual paychecks.

Should the 27th Payroll Be Paid in the Year in Which It Occurs?

The additional runs that come with the biweekly schedule can add to the administrative work done throughout the year. However, the calculation becomes a little bit challenging semimonthly vs biweekly for employees who are paid on an hourly basis. As you will notice, each pay period may contain a different number of working days.

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. 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. Full-time semi-monthly employees will receive 86.67 hours of pay per paycheck. In the most practical terms, that means employees who are paid bi-weekly receive more paychecks than employees who are paid semi-monthly.

There is no one approach to payroll scheduling and some companies will use a combination of both. CPA Practice Advisor is the definitive technology and practice management resource for accounting and tax professionals. CPA Practice Advisor has products that deliver powerful content to you in a variety of forms including online, email and social media.