Biweekly vs. Semi monthly Payroll

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It is vital to decide on the pay frequency or the amount of time between an employee’s paydays for a small business. The pay frequency of your business determines when you process your payroll and how often your employees get their salary. One of the popular pay frequencies is semi-monthly.

Pros of SemiMonthly Pay

A semimonthly pay has a flexible structure, unlike weekly, biweekly, or monthly pay schedule. Its structure allows the salary expenses to be adjusted easily into the expected budget. We made a list of the pros of semi-monthly pay.

1) It’s easier for the average employees to understand the payment schedule.

Employees typically ask the question “When will be the next pay schedule?” if you’re paying them once a week or every other week. Those kinds of issues go away if you are using the semimonthly pay because the employees have a regular schedule of payroll. Usually, companies pay their employees on the 15th and last business day of the month.

2) It blends in with other types of payroll.

Semimonthly pay may be included with other forms of payroll to meet the needs of the organization and employees effectively. You may frequently notice that more prominent organizations might have a pay schedule of bi-weekly for full-time employees, weekly for temporary and part-time employees, and semimonthly for regular employees.

3) Cost-saving and lesser cycles to run

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.

4) Gets rid of the issue with leap year and odd days

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.

5) Easier to calculate accruals

It is easy to implement the contracted benefits if you are paying out benefits twice per month. You will be able to know the amount needs to be paid out with each payroll period by dividing the amount agreed upon by 24.

How Many Hours Does Semi-monthly Have?

There are 86.67 hours in the semi-monthly payroll. Since there are 52 weeks in a year, multiply it by 40 hours which equals 2080 hours. Divide 2080 by 24 (annual semimonthly pay periods) and that arrives at 86.67 hours for the semi-monthly period.

How Many Weeks Does Semi-Monthly Have?

Semi-monthly pay period has an average of 8.16667 weeks per payday. Since it has 24 payment periods and there are 52 in a year. So, 52 divided by 24 equals 8.16667.

Which is One is Better? Semi-Monthly vs Biweekly Pay

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.

Paychecks Number Per Year

With a semimonthly payment schedule, employees always receive two paychecks each month. 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.

Paycheck Amount

Employees who are paid semi-monthly have higher paychecks than those who are paid every other week since companies who use semi-monthly frequency run payroll less. However, companies who use bi-weekly frequency will provide two additional paychecks to make up the difference.

At the end of a year, regardless of which payment frequency you use, the employee will receive the same amount of money and owe the same amount of taxes.

Payday

The schedule when employees receive their paychecks and when you run payroll is also one of the differences between the two pay frequencies.

Employees who are paid bi-weekly receive their wages the same day each period. For instance, you continuously pay your employees every other Friday, so on the same day each pay period, you run payroll.

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 may get its paycheck on a Monday and Thursday.

Conclusion

Deciding which pay frequency will you use for your small business can be a tough decision, mainly because it is stated in federal pay laws that you must use the same frequency throughout the year.

Before deciding, always remember that states control how often you must pay employees. Check with your state since in some particular states you can’t use semi-monthly pay frequency.

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