In many states, there are regulations about how often the employees need to be paid. Thus, it is important to check the frequencies of payment in different states before arriving at the final decision. As an employee, one of these pay periods isn’t technically better than the other. You won’t make more or get taxed less by choosing one or the other.
Another difference between semimonthly pay vs. biweekly pay is what day of the week you run payroll and which day employees receive their paychecks. 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. In semi-monthly frequencies, payroll is processed fewer times than biweekly, so employees’ paychecks are larger. Furthermore, biweekly paychecks are smaller, but employees will receive two extra paychecks to make up the difference.
How Pay Transparency Can Improve Staff Retention and Recruitment
See how Namely’s flexible solution will help you streamline your HR processes by having your people, payroll, and benefits info all in on place. Semimonthly is an adjective that is derived from the prefix semi-, which means half, part, partly, twice, as it comes from the Latin semi-, meaning half, and monthly. In the United States semimonthly may be used as a noun, the plural noun form is semimonthlies. Semimonthly is often found hyphenated as in semi-monthly, but the Oxford English dictionary only lists it as one word, unhyphenated.
It’s important to note that these employees aren’t actually paid more, and employees with a biweekly schedule will “make up” that money in the months with three paydays. A semimonthly payroll requires less payroll processing than a biweekly payroll since it happens only 24 times per year. 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. The most obvious difference is that a semimonthly payroll is paid out twice a month, while a biweekly payroll is paid out every two weeks.
It’s also important to recognize and appreciate the work that goes on behind the scenes for those who run payroll. The cloud is poised to revolutionize Client Accounting Services (CAS). Semimonthly vs biweekly 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 …
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When paydays fall on holidays or weekends, employers may pay employees on the preceding Friday or workday. If you’re running any sort of business that employs people, an aspect that begs your attention is the pay frequency for your employees. There are two commonly used pay schedules – semi-monthly and bi-monthly. 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. 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.
For businesses, it can be less expensive to pay employees semi-monthly instead of bi-weekly. In addition to the cost savings, semi-monthly pay makes it easier for businesses to calculate tax and benefits deductions. 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.
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As the number of days in a month varies, how much pay you get will also change. The number of days in the last half of the month will usually either be 15 or 16. 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. 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. Bi-weekly pay is calculated by dividing an employee’s gross annual salary by 26.
- A semi-monthly payroll schedule pays employees twice a month, totaling 24 cheques for the whole year.
- Semimonthly pay may be included with other forms of payroll to meet the needs of the organization and employees effectively.
- In this article, we’ll discuss the difference between bi-weekly and semi-monthly pay periods.
- Even though this extra “bonus” check is expected, it helps make it easier to meet savings goals or reduce debt in those months if the employee has a personal budget.
- SurePayroll is not responsible for information contained within any of these materials.
Full-time salaried employees are typically paid for 2,080 work hours yearly, and this must be delivered to employees regardless of the pay frequency. The difference is that full-time biweekly salaried employees will be paid for 80 hours each payday. Full-time semi-monthly employees will receive 86.67 hours of pay per paycheck. Depending on the month, payday may happen on a Saturday, Sunday or holiday.
Most confusion comes with understanding biweekly and semi-monthly payroll schedules because they seem very similar. 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. On the other hand, semi-monthly hourly payroll processing can be a little more confusing. You may need to specify that the pay period ends earlier for semi-monthly payments than biweekly payments.
What is a Bi-Weekly Payroll? How Does it Differ From a Semi-Monthly Pay Schedule?
Your pay frequency determines how often you process payroll and when employees receive their paychecks. Under a biweekly payroll schedule, employees receive a check every two weeks, which equals 26 paychecks per year. Typically employees receive their paycheck on a specific day of the week, such as Friday. There are a few months under this payroll schedule where employees will receive three paychecks instead of two.
Our Recommendation Between Semi-Monthly vs Bi-Weekly Payroll
However, there are two months in the year where employees who are paid bi-weekly receive three paychecks in a month. So, companies that use bi-weekly pay schedules give 26 paychecks per year while companies that rub payroll with a semimonthly frequency give 24 paychecks per year to their employees. You need to consider how many employees you have and whether those employees are hourly or salaried. To combat this, you could run semimonthly payroll for salaried employees and biweekly for hourly workers. Deciding on a pay frequency for your small business is an important decision.
For example, a business operating a bi-weekly payroll schedule might pay its employees every other Friday, irrespective of when one month ends or a new one begins. 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. For full-time salaried employees, biweekly schedules typically account for 80 hours of work. However, semimonthly paychecks for full-time salaried employees account for 86.7 hours of work. In a biweekly pay period or schedule, the employee is set to receive a paycheck every other week.
If your employees are salaried, then their paychecks amounts will remain the same every single time. Since your payroll team knows there are exactly 24 payments in the year, they can divide up the deductions among these payments quite satisfactorily. This means that the deductions are the same every month since there are only two paychecks a month (never three). That makes it so both your payroll department and your employees can plan their lives much better. The issue with semimonthly pay is that it can get a bit complicated for hourly workers.
Therefore, the days are different; an employee may get its paycheck on a Monday and Thursday. The schedule when employees receive their paychecks and when you run payroll is also one of the differences between the two pay frequencies. One of the key advantages of a bi-weekly payroll is that employees know they have a paycheck coming every other Friday – or whatever day you choose – and what the exact amount is. 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. However, semimonthly payroll schedules also have their disadvantages.
Semi-monthly payroll vs bi-weekly payroll: The pay frequency breakdown
For example, your employees are consistently paid every other Friday, so you run payroll on the same day each pay period. A biweekly payroll is when a company distributes paychecks every other week on the same day. If the chosen payday is Friday, employees will receive their paychecks every other Friday, totaling 26 paychecks for the year.
Payroll providers offer various options which can consist of base fees, per-paycheck fees, additional fees for paper checks, and more. Band of Hands keeps it simple, but offering a full suite of payroll services that accommodate any pay frequency at $10/week. This $10/week also includes full HR Support, compliance, onboarding, hiring services, and handling of unemployment and workers comp claims. When it comes to semi-monthly vs. biweekly, there is literally no difference in the amount per year your employees will be paid. An employee who gets $51,000 per year will receive the same annual salary regardless of whether they are being paid semi-monthly vs. bi-weekly.
If you have 10 employees who each earn $1,500 in gross wages per paycheck, you’ll need to have an additional $15,000 on hand both months that have three paychecks in them. Hourly employees are usually paid bi-weekly because tracking their hours on a weekly basis makes it easier to pay employees. 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. 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. If you are paid semi-monthly, you will be paid $1,750 per paycheck before taxes (your salary divided by 24 checks per year).