Because hourly wages are easier to calculate on a bi-weekly basis, as each paycheck accounts for the same number of days. Conversely, semi-monthly paychecks will vary in the number of days they include, making it more challenging for whoever handles the company’s payroll. When you pay employees semimonthly, you can count on paying the same amount to employees each month. The extra two paychecks for biweekly pay frequencies can set your business back if you don’t properly prepare for months with three paychecks. You will need to make sure you have enough money in your payroll account to cover the additional expenses. On this schedule, employers pay employees less frequently, and paydays are inconsistent.

Other payment systems have to adjust to the infrequent leap year day and odd-numbered days. However, semi-monthly payroll can carry on unencumbered since it is set up to adapt to those changing circumstances. And employees are still able to get their full salary on the final payroll date of February which is on the last business day of the month, even if it falls on the 26th or 29th. A biweekly schedule does require some more attention in order to keep track of when you’re paid, as the pay dates shift. However, the amount that you’re paid won’t vary (assuming you work consistent hours), making keeping track of your hours and overtime easier.

Choosing between semimonthly vs. biweekly payroll

For example, your employees are consistently paid every other Friday, so you run payroll on the same day each pay period. As a result of the pay frequency difference between semi-monthly and bi-weekly payroll, semi-monthly employees receive 24 paychecks each year, while biweekly employees receive 26. If you run a biweekly payroll, employees receive their wages the same day each pay period.

In an ideal world, there would be four weeks in every month; however, this is not always precisely the case. If employees get paid biweekly, then they would know to expect a payment, every other Thursday, for example. If you are accounting for churches running a semi-monthly payroll period, however, they know that they will receive a payment on the 7th and the 21st of the month. Before choosing, it’s important to know that states regulate how often you must pay employees.

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

Take a look at the differences, pros, cons, and statistics between the two to help narrow down your choice. An employee’s tax liabilities won’t be affected by the length of their pay period. Total tax liability is based on the total amount earned in a year rather than on paycheck frequency. Before making any decision about how often you pay employees, check your state’s payday requirements from the DOL as some states require more frequent pay intervals. Biweekly pay refers to a schedule of employees getting paid every other week; this means that employees can expect to get paid 26 times per year (and 27 times if there’s a leap year). Bi-weekly pay for an hourly employee is calculated by multiplying their hourly rate by the number of hours worked in a two-week period.

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. Paychecks on a biweekly pay schedule are paid out every other Friday.

Choosing your payroll provider

Bimonthly, like biweekly, means every two; something that happens bimonthly happens every two months. Semimonthly, on the other hand, is twice a month, as semi means half. Before finalizing the payroll schedule that best suits you, you may also consider some other types of payroll schedules. Choosing the right pay schedule is a crucial decision for any organization, be it a large enterprise or SMB. It can determine the type of talent you attract and the long-term expenses you incur as a business. 1) It’s easier for the average employees to understand the payment schedule.

Because the payroll is processed fewer times for semimonthly frequencies than biweekly, employees’ paychecks will be greater. Biweekly paychecks will be be for less money, but employees will receive the two additional paychecks to make up the difference. Lastly, there’s a chance that as a business owner, you’ll be incurring higher costs for the frequency in which paychecks are dispersed. Different payroll providers can tack on additional costs for each occasion payroll is run. So if you’re using a biweekly payroll system, then you’ll have a higher annual cost than in a bimonthly frequency.

Biweekly Payroll Disadvantages

In other words, biweekly events occur twice a month, but the exact number of occurrences may vary depending on the number of days in a month. Over the course of a year, biweekly events will happen 26 times, since there are 52 weeks in a year. In the case of pay periods, for example, a biweekly pay schedule would result in an employee receiving 26 paychecks per year. Biweekly and semimonthly payroll options can be confusing because, for the most part, the number of paychecks received per month is exactly the same.