It comes from the Latin bi-, meaning twice, double, and weekly from the Old English word monað. Payroll software such as Paychex and ADP charges every payroll run. So, if you are using this payroll software, you can save money by processing lesser payroll runs. Although more paychecks may be a pro to some, the drawback of the checks being smaller may be a con to others. In a perfect world, employees would be able to choose a pay cycle that works best for them, or better yet, simply let them get paid whenever they need it.

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. Lack of Certainty- Moreover, there is a lack of certainty for the employees regarding which date they are going to get paid.

Get up and running with free payroll setup, and enjoy free expert support. Our services cover all aspects of your payroll process and payroll tax needs. Knowing what makes each option attractive or not can help in your choice.

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.

Working overtime trying to pay your employees? Download Namely’s Guide to Payroll.

The prefix “bi” means two, so it’s a one-word way of saying two weeks. Now that you’ve determined which payroll frequency is right for you, it’s time to compare service options. Payroll is one of the most important aspects of running your business, yet shopping for payroll services can be confusing. 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.

While most international businesses typically run payroll on a monthly or weekly basis, employers here at home have taken the middle-of-the-road approach. Personal preference is definitely important when choosing between the two payroll styles. If you like your paychecks to be consistent to make accounting a little easier—then a biweekly payroll style is better for you (and it’s also the more common option among employers). The greater consistency that comes with biweekly paychecks can result in an easier time managing finances. Financial management tends to benefit from clear paydays and due dates, so having a reliable, consistent paycheck can help alleviate the potential stress of keeping finances in order.

However, some people do have personal preferences on these pay frequencies. As you got older, you started to realize the best times to ask for extra cash—right when that sweet, sweet paycheck came in every two weeks. With this, you are ready to decide between the two kinds of payment schedules for your business. To get the salary for either of the pay groups, you need to divide the annual salary by the number of pay periods. 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.

What is the difference between biweekly and semimonthly pay?

Because you run payroll less for semimonthly frequencies than biweekly, your employees’ paychecks will be greater. Biweekly paychecks will be less money, but you will provide the two additional paychecks to make up the difference. Biweekly pay and semimonthly pay can be confusing because employees generally receive two payments per month. No matter which payroll schedule you have at your small business, it’s important to set aside enough time to run and ensure your employees are paid on time. You also want to give yourself plenty of time to reduce the risk for errors and mistakes. You’ll also want to keep an eye out for bank holidays so you can be sure to run payroll early if needed.

Remember, bimonthly may mean occurring twice a month or occurring every two months, semimonthly only means occurring twice a month. A lot of employees end up putting these extra paycheques into savings, investments, or even into their mortgages because it’s kind of a bonus. There’s always a tug of war between what suits the bottom line best and what will best suit your employees. Sometimes you go one way and satisfy the employees and other times you have to do something that will frustrate them. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance.

• 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.
• Because of the number of paydays, semimonthly paychecks are larger than biweekly paychecks.
• Since some months have 31 days and others have 30, a semimonthly hourly employee may sometimes receive payment for different number of days.
• Employees who are paid semimonthly always receive two paychecks per month.
• However, semimonthly paychecks for full-time salaried employees account for 86.7 hours of work.

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. In other states, however, companies are required to pay their employees at least on a bi-weekly basis.

You might not be able to use biweekly or semimonthly pay frequencies in certain states. Weekly pay cycles are particularly common in blue collar industries like manufacturing and construction. In contract work, where work can stall suddenly due to permitting issues or a client running out of funds, more frequent paydays offer a certain sense of security. For HR teams, these same qualities make weekly pay cycles a nightmare to administer.

While doing so might sound untenable if you’re handling payroll in house or with spreadsheets, it’s actually a routine ask of most payroll vendors. Namely processes over $7 billion in payroll annually, much of it for companies in similar situations. To learn how technology can make processing payroll easy at any frequency, Semimonthly vs biweekly schedule a demo today. Unfortunately, there are not exactly the same number of workweeks in each month nor are there exactly the same number of days and hours in each semi-monthly pay period. If you’re an employer, paying your employees a third paycheck in certain months can set your business back if you aren’t prepared.

Semi-Monthly vs Bi-Weekly Payroll

In this article, we’ll explore the differences between a semimonthly and a biweekly payroll. 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. Depending on several factors, employers choose to pay their employees biweekly, weekly, monthly, and semi-monthly. In this article, we’ll discuss the difference between bi-weekly and semi-monthly pay periods.

Employers may find paying hourly employees on a biweekly schedule simpler. 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 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.

• Typically, semimonthly payroll schedules work best for salaried workers.
• To get the salary for either of the pay groups, you need to divide the annual salary by the number of pay periods.
• Depending on whether you are a salaried, permanent employee, the total yearly salary may be divided into 24 checks by the employer.
• With a semimonthly payment schedule, employees always receive two paychecks each month.

Keep in mind that financial wellness can have a big impact on employee experience. If you have hourly employees, a biweekly pay schedule makes it significantly easier to calculate overtime. A lot of people may be confused between semimonthly and biweekly pay since employees receive two payments monthly. But there are a lot of things you need to know about these two pay periods. Employees typically ask the question “When will be the next pay schedule?

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. Calculating for holidays and weekends is a reality that should be anticipated if you’re considering a semimonthly payroll. Despite paydays consistently being 15 days apart, the day it rests on is practically random, meaning that there’s a chance that paydays can fall on a weekend or holiday. With a semimonthly payroll, paychecks are likely to be more inconsistent. While they will always predictably be twice a month, which days those paychecks end up on can vary.

What are the pros and cons of semi-monthly vs bi-weekly pay?

Semimonthly payroll pays employees twice a month, often on the 1st and 15th of the month, meaning that employees are paid 24 times in a year. Biweekly payroll is paid out every other week, usually on a Friday. Since there are 52 weeks in a year, employees are paid 26 times in a year. For example, the employee may receive payment for 12 days during one pay period and 13 days the next.

What is the difference between bi-weekly pay and semi-monthly pay?

Lucky for you, we’ve compiled a full guide on what makes these two types of payrolls different. After learning the difference between semi-monthly and bi-weekly payroll, let’s look at the pros and cons of each. Growing up where I’m from, most people were on a bi-weekly pay schedule. In July 2017, the first pay period would have 10 workdays and the second pay period would have 11 workdays. If we assume the employee works an eight-hour day, then the following would be true. When setting up payroll for your small business, one of the things you’ll have to set up is a payroll schedule.

Our ability to centralize and coordinate global payroll cycles allows you to streamline your international payroll, ensuring accuracy in payment and full compliance with local laws. Contact us today to find out more about our international payroll solutions. For companies with a global presence, or those who hope to have one, read our guide on payroll processing across international borders.

What Does Biweekly Mean?

A semimonthly would be a great choice for an entrepreneur who wants to put the same amount of money into their payroll each month. The trade-off would be having to make sure that your payroll clerk stays on top of the ever-changing payday. This might mean preparing the cheques or deposits on Friday to make sure they’re ready for Monday. Don’t worry, you’re not going crazy, you just haven’t fully grasped the semi-monthly vs. bi-weekly payroll debate yet.