Biweekly vs Semimonthly Payroll Understand the Difference

A semi-monthly payroll occurs twice each month on specific dates, such as the 15th and 30th. In February, the end-of-the-month pay date would need to be moved forward for semi-monthly paychecks, in addition to those that fall on a weekend. Earned wage access or on-demand pay can be a valuable financial wellness benefit for hourly employees.

• It is significantly different from the more common bi-weekly payroll system.
• So let’s dive deeper into the differences between Semi-Monthly vs Bi-Weekly Payroll.
• And if you outsource your payroll, you may experience more service fees.
• The hourly difference occurs because of the distinction in the number of paychecks the employees will receive.

However, they may not necessarily fall on the same day of the week, and you would end up paying your employees 24 times in a year instead of 26. With PrimePay’s payroll software and payroll service solutions, you can easily stick to your payroll schedule. PrimePay helps you run payroll accurately and on time to meet any schedule you choose, and it ensures compliance with all payroll- and tax-related laws and regulations. And we provide you with the opportunity to offer financial wellness benefits to employees at no cost or lift to you. Before choosing, it’s important to know that states regulate how often you must pay employees. You might not be able to use biweekly pay or semimonthly pay frequencies in certain states.

How do I Calculate Bi-Weekly Net Salary?

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. When it comes to semi-monthly pay, you don’t get paid more but your paychecks will be slightly bigger. While semi-monthly pay won’t be consistent in the days of the week that you’re paid, it will offer consistency in the day of the month, assuming payday falls on a business day.

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. Semi-monthly and bi-weekly pay schedules each have their benefits and drawbacks. 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. For example, in Alabama and South Carolina, there are no specified regulations, so companies can choose whichever schedule they prefer.

Key differences between semimonthly and biweekly payroll schedules

Running a semi-monthly pay for non-exempt employees can be challenging. It is significantly different from the more common bi-weekly payroll system. But before detailing how to structure semi-monthly pay for your company, it’s first important to clearly understand what semi-monthly pay means. As the name suggests, biweekly payroll involves paying employees on a set day every other week, resulting in 26 paydays per year, or 27 if it’s a leap year. Namely’s own client data suggests that Friday is a particularly popular choice among companies with biweekly pay, accounting for nearly 60 percent of all paydays.

Get up and running with free payroll setup, and enjoy free expert support. Make sure your business gets the most out of payroll performance and stay compliant by keeping track of https://investrecords.com/the-importance-of-accurate-bookkeeping-for-law-firms-a-comprehensive-guide/ your payroll performance. Using bi or semi in front of time periods can create tremendous confusion these days as definitions and style guidance continue to soften and blur.

Biweekly vs. Semi-Monthly Payroll: What’s the Difference?

The business may consider choosing a provider that allows unlimited payroll runs, regardless of frequency. We recommend you take the three key differences and pros and cons between semi-monthly vs bi-weekly payroll when making your decision. Employees prefer the semi-monthly system as it is much easier to do the cost analysis and monthly budgeting. It is more complicated to do the cost analysis and budgeting for bi-weekly payouts as some months will have three payment dates. Bi-weekly payment is where employees are paid on a specific day of the week, every two weeks.

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. That makes a biweekly schedule better for hourly workers, as hours are easier to track and paychecks are more consistent. The trade-off is the fact that when you’re paid varies continuously. Employees who are paid semi-monthly have specific dates for their payment schedule, such as the 15th and last business day of each month.

The lack of consistency with semimonthly payroll can also be a turnoff for some businesses and employees. Since payroll will be processed on a different day of the week, the person running payroll could lose track of that responsibility. Running semimonthly payroll can be particularly difficult to track when weekends and holidays come into play. If payday falls on a holiday or weekend, te payroll will either need to be paid in advance or delayed through the weekend or holiday, adding another factor to the processing duties. A biweekly payroll schedule will typically be seen in the eyes of your employees as “dependable” and “consistent”. Also, your payroll clerk will be able to keep a consistent schedule and pace with how they distribute them.

Employers pay employees on the number of hours they worked in the previous two-week period. In many cases, the employer may track hours a week behind the current payday. For example, the employer may track hours for the first and second The Importance of Accurate Bookkeeping for Law Firms: A Comprehensive Guide week of the month but pay in the third week. That way, employers don’t have to wait for current timesheets before they can run payroll. Whether you choose a bi-weekly or bi-monthly payroll system depends on the needs of your business.

ARE ACCELERATED BIWEEKLY PAYMENTS BETTER THAN A SEMI-MONTHLY PAYMENT

Namely’s powerful HR Software is built for mid-sized companies — designed to be used by everyone, every day. This website is using a security service to protect itself from online attacks. There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. Cost avoidance has to do with any action that avoids having to incur costs in the future. It’s also important to recognize and appreciate the work that goes on behind the scenes for those who run payroll.