The Advantages of Bi-Weekly Vs Semi-Monthly Payroll Chron.com

If not, it will be received the Monday after or the Friday before. This is a common misconception, but no—because some months have more than four weeks, a bi-weekly and semi-monthly payroll frequency aren’t quite the same. Bi-weekly pay is the most common payroll schedule for businesses in the United States. 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.

For example, an employee making $40,000 annually will make $19.23 an hour under a bi-weekly payroll system (($40,000/26)/80) but only $18.73 per hour bi-monthly (($40,000/24)/89). For obvious reasons, paying your hourly staff biweekly makes it a much easier and less troublesome way to calculate your employee payment amounts. Yet, it is less expensive to process salaried workers semi-monthly. 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. The hourly difference occurs because of the distinction in the number of paychecks the employees will receive.

Semi-monthly vs. Biweekly Pay Schedule

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. Also, this means that your employees will get 2 EXTRA paychecks every year, that is, 26 paychecks a year. In two months of the year, the employees will get three payments, instead of two. You only have to run payroll twice a month (instead of three times two months out of the year), which means that you will save money on payroll processing fees. Semi-monthly payments come on the same dates every single month.

Employees who are paid semi-monthly have specific dates for their payment schedule, such as the 15th and last business day of each month. Therefore, the days are different; an employee https://www.bookstime.com/articles/semimonthly-vs-biweekly-payroll may get its paycheck on a Monday and Thursday. While it may be true that biweekly payroll is the most common pay cycle, how do you know if it’s right for your company?

Benefits of a Bi-weekly Payroll System

Biweekly and semimonthly can be confusing because employees generally receive two payments per month. However, there’s more to these pay periods than meets the eye. 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.

That makes it so both your payroll department and your employees can plan their lives much better. The bridge payment is a subsidy offered by Lehigh to bring affected employees W2 earnings back to what they would have been had there been no change to the payroll schedule. If you have employees, then you have payroll because people expect to be paid. Choosing how to pay your employees is a decision that might seem simple enough on the surface, but it really does require some thought.

Which Industries Use Biweekly Pay?

With that in mind, here’s what you need to know to choose a payroll schedule that’s right for your business. One point of consideration is how many employees you have and if those employees are paid hourly or salaried. Running a semimonthly payroll for hourly employees is more difficult and confusing than doing so for salaried employees, especially when workers earn overtime pay. The four most common pay period options are weekly, biweekly, semimonthly, and monthly. But, biweekly and semi monthly can be confusing, as employees receive roughly two paychecks per month.

• The pay frequency of your business determines when you process your payroll and how often your employees get their salary.
• Those kinds of issues go away if you are using the semimonthly pay because the employees have a regular schedule of payroll.
• When employees are paid on a semimonthly basis, they’re paid twice a month regardless of how many weeks there are.
• You may need to specify that the pay period ends earlier for semi-monthly payments than biweekly payments.
• In a calendar year of 52 weeks, such a schedule will mean the business pays its employees 26 paychecks per year or 27 paychecks in a leap year.
• When it comes to semi-monthly vs. biweekly, there is literally no difference in the amount per year your employees will be paid.
• Since payroll will be processed on a different day of the week, the person running payroll could lose track of that responsibility.
• The gross amount of the bridge payment represents 3.2% of your annual salary.

It’s also important to recognize and appreciate the work that goes on behind the scenes for those who run payroll. Read here to know more about employee withholdings for global employees. Read here if you’re interested to outsource your global payroll functions. The cloud is poised to revolutionize Client Accounting Services (CAS). With a desktop system, bill payment and bookkeeping for a substantial number of clients is a daunting task. Getting invoices and source material, entering data, and printing and …

Typically, biweekly paydays happen on the same day of the week but not the same date. Months with “extra” paydays can impact cash flow, so it’s important to account for them during cash flow planning. Typically, semimonthly paydays occur on the 15th and last day of the month.

In a semi-monthly payment schedule, the day is always different, even though it falls on the same dates every month. HR processes can be streamlined as pay dates are the same every single month. And your employees know that they get paid on the same dates every month, so they can budget their household and other expenses around these dates.

The only thing that matters here is the amount in the check and how frequently you get the same. Also, if a semi-monthly payday lands on a weekend or holiday, plans will need to be made in order to pay employees either before or after the break in the week. If you want to keep your budget consistent and put the same amount of money into payroll each month, a semi-monthly payment model would be a no-brainer. Just be sure to keep your employees updated on any advanced or delayed payments you will be making and everything will be just fine.

• Every side will have a preference one way or another, but in the end, you have to use the strategy that works best for your business’s bottom line.
• They expect timely payments to be made so that they can handle their household expenses and also save something for their future.
• The bridge payment will be paid automatically to affected employees.
• Likewise, semiconscious means halfway or partially conscious.
• Depending on several factors, employers choose to pay their employees biweekly, weekly, monthly, and semi-monthly.
• Both percentage based and flat dollar contributions do not receive a benefit holiday as they are taken out of all 26 paychecks.

The key difference between biweekly and semi-monthly pay lies in how often pay dates occur. Biweekly pay dates occur every other week, and semi-monthly pay is paid out on two specific dates a month (e.g. every 5th and 20th of the month). In 2022, there will be 14 semi monthly pay periods, one bridge payment, and 10 bi-weekly pay periods.