Semimonthly vs biweekly: 3 Key Differences Between Semi-Monthly vs Bi-Weekly Payroll

Bi-weekly payroll means that employees are paid once every two weeks. There is no change in the amount of taxes that are paid when an employee is paid either semi-monthly or biweekly. The only difference is when the payment is made, which does not impact tax rates. John’s Tyre Barn pays their employees semimonthly on the 15th day and the last day of every month.

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

Second, if you choose to pay your team biweekly, you will end up having two months of the year where you will be paying them three times instead of two. This requires payroll expense accruals, so your accountant can identify costs in the month the additional compensation was paid. We hope this blog gave you a comprehensive understanding of biweekly vs. semi-monthly payrolls. Choosing between these options involves recognizing the nuances of each. Biweekly payroll means paying employees every other week, totaling 26 paychecks per year. Take into account your company’s overall payroll preferences and your employees’ needs.

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. The one downside to biweekly payments is the inconsistency in how much money you are paying out each month. There will always be a couple of months where you will have three paydays instead of two. It will be up to you and your accountant to make sure you will have enough to cover the extra payout.

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Can companies use a combination of both semimonthly and biweekly payroll?

When it comes to the way that your company handles payroll, you might find that there are various options available for you. Employees are paid twice a month on specific dates, with many companies choosing the 1st and the 15th of the month. Thus, HR teams have to monitor pay dates and make adjustments to ensure timely pay.

• The time it takes by the organizations’ HR and accounting departments for payroll processing must also be considered.
• This results in semi-monthly pay periods that are consistent but vary in length, ranging from 14 to 16 days depending on the month.
• According to the Bureau of Labor Statistics, 43% of businesses in the U.S. use a bi-weekly pay schedule, while 19.8% use semi-monthly payroll.
• Tools like AttendanceBot which support both bi-weekly payroll and semi-monthly payroll can help simplify the process.
• In this case, employees with direct deposit generally receive payment on the preceding business day.

With bi-weekly payroll, employees are paid 26 paychecks a year, compared to 24 semimonthly vs biweekly like bi-monthly receives. 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. Payroll processing for biweekly hourly employees is straightforward; however, processing for semimonthly hourly employees can get confusing.

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Semi-Monthly vs BI-Weekly Payroll: What’s the Difference?

Bi-weekly pay, with its varying payday dates, may require a more flexible approach to financial management. Let’s say you have 10 employees who each earn $1,500 in gross wages per paycheck. You will need to have an additional $15,000 on hand both months that have three paychecks in them. Before choosing, keep in mind that states regulate how often you must pay employees.

Bonus vs. Payroll Tax

A biweekly payroll schedule pays employees 26 cheques per year every second week, usually on a Friday. This method is preferred by companies who pay their employees on an hourly basis and need to keep a reliable payment schedule. Bi-weekly pay schedules have 26 pay periods in a year vs semi-monthly’s 24. That means you’ll make two extra paychecks to your employees in a year with a bi-weekly pay schedule. If an employee makes $36,000 a year and they are paid semimonthly, they will receive a $1500 check two times a month. A biweekly payroll is a payment schedule where an employee is paid every two weeks.

The second workweek of the month (July 10th – July 16th) fell between the first and second pay periods. This caused five hours of overtime earned during the second workweek to be held until July 31st, along with one overtime hour earned in the fourth week of the month. With semi-monthly payroll, some weeks start and end in the same pay period.

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Advisory services provided by Carbon Collective Investment LLC (“Carbon Collective”), an SEC-registered investment adviser. If you have a staff meeting every other Wednesday, you will usually have two such meetings per month (i.e., semi-monthly). When you add these parts together, you get an adverb that means occurring every two weeks or every other week.

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. Choosing between weekly and semi-monthly, or bi-weekly and semi-monthly, affects how often employers need to run payroll. Frequent schedules like bi-weekly may suit larger businesses with robust payroll systems, while semi-monthly payroll fits smaller organizations. A bi-weekly payroll works fine for companies that regularly hire a lot of new hourly and salaried employees.

For a semi-monthly employee, you have to divide 2,080 by 24 pay periods (twice a month). Some organizations settle upon a combination of payrolls, using the semimonthly approach for salaried workers and a biweekly payroll for hourly employees. If you own a small business, you face an important decision when deciding on a pay frequency. Your pay frequency means how often you process payroll and when your employees receive their paychecks.

This is an important consideration for workers who would rather get paid more often. 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.