While taking care of their interests, they also need to give due consideration to the state regulations. 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.
Employees Don’t Like Time Tracking? It’s Probably Your Fault
The rule of thumb is to pick semi-monthly if you are a salaried employee and bi-weekly if you are an hourly employee. Semi-monthly or bi-monthly payroll is a payment schedule through which employees receive payment twice a month. Other factors could also influence what payroll type benefits your company and employees more. Whether semi-monthly or biweekly payroll is right for your business will depend on several factors.
Why do companies pay on the 15th and 30th?
You will need to make sure you have enough money in your payroll account to cover the additional expenses. 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. That means that in a semimonthly pay schedule, you get paid 24 times a year, and with a biweekly schedule, there are 26 pay periods. Choosing the right payroll schedule helps businesses manage their financial commitments and overall administrative workload while driving employee satisfaction. Both are great, and the one you choose depends on your industry, company size, number and type of employees, and payday regulations in your region. In a biweekly pay period or schedule, the employee is set to receive a paycheck every other week.
Bi-Weekly vs Semi-Monthly Payroll FAQs
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. The distinction between semi-monthly vs biweekly payroll might seem subtle, but it’s crucial to understand for effective payroll management. Semi-monthly payroll may be a great choice for businesses with employee benefits deductions, such as health insurance and retirement contributions. Paydays align with monthly financial reporting, making it easier to deduct and report deductions from employees’ paychecks.
Understanding semi-monthly payments
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. It all depends on what makes the most sense for your unique business restrictions. Biweekly, or more rarely fortnightly, means every two weeks, which works out to 26 paychecks per year. While biweekly may sound like it means twice per week, the correct term for that would be semiweekly. The prefix “bi” means two, so it’s a one-word way of saying two weeks. Now that we’ve gone through the main differences between a semi-monthly and a bi-weekly payroll, let’s take a look at each schedule’s pros and cons.
Whether you choose bi-weekly or semi-monthly, tracking work hours will be vital for both employees and employers. There aren’t such issues with the bi-weekly payroll, as salaries are processed on the same day every second week. This makes it easier for the finance department to prepare and process payments on time. However, with the two added payments, they will also have two additional payrolls to process. For example, let’s imagine that your gross annual income is $70,000.
- Your payroll choices also need to align with the Fair Labor Standards Act (FLSA).
- Consider how bimonthly vs. biweekly payments align with your business needs and regulatory requirements.
- Employees are paid twice a month on specific dates, with many companies choosing the 1st and the 15th of the month.
- When it comes to semi-monthly vs. biweekly, there is literally no difference in the amount per year your employees will be paid.
In contrast with the semi-monthly pay date, the bi-weekly payday can fall on a different date each month. These are usually fixed dates, such as the 1st and 15th day of the month or the 15th and 30th. When scheduled to receive their salary on a semi-monthly basis, employees receive 24 paychecks each year.
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. 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. Bi-weekly payroll systems reduce administrative complexities for hourly employees through easier management of work hours and overtime pay.
Consider your company’s ability to manage budgeting and cash flow projections. If these tasks are challenging, a different pay frequency might simplify your financial management. A bi-weekly payroll works fine for companies that regularly hire a lot of new hourly and salaried employees. 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.
To be able to do payroll with Clockify, you first need to create and assign projects (you can assign as many people as you want for free). Then, you can set hourly rates and calculate how much you will get paid, or how much you should pay your employees. If certain tasks, such as budgeting and cash flow projections, are more challenging for your company and HR team, consider switching to a different pay frequency.
It tops the list, with 43% of US private establishments paying their employees every 2 weeks. For example, in one month, the 15th and the 30th can be Wednesday and Thursday, and in the next month, they can be Saturday and Sunday. Due to this, sometimes payments must be rescheduled for an earlier or a later day as banks don’t process transactions on the weekends. Bi-weekly payroll is a payment schedule through which employees are paid every two weeks on a particular day of the week. In short, semi-monthly pay periods are not the same as a monthly pay period. With a monthly pay period, you pay employees once a month, typically on the last day of the month.
The paycheck amount is slightly smaller for the bi-weekly pay as it is more frequent. On the other hand, semi-monthly means you get paid twice a month, usually around the 1st and the 15th. This usually results in 26 paychecks a year since there are roughly 52 weeks in a year. Inform your employees about the reasons behind transitioning to a new payroll schedule. Clear communication helps ease the transition and ensures employees understand the benefits and impacts of the change. The issue with semimonthly pay is that it can get a bit complicated for hourly workers.
In case of holidays or weekends, the payment needs to be done in advance or delayed. This not only creates a lot of confusion but also disheartens the employees. After considering the number of employees working and how many of them are salaried and hourly, the decision of running a semi-monthly payroll must be taken. Here is a detailed bi-weekly vs semi-monthly pay differentiation. There are four common pay period options, including weekly, biweekly, semimonthly, and monthly. In contrast, semi-monthly pay involves two payments per month, often on set dates, resulting in 24 paychecks annually.
Learn how you can use time tracking to attract accountants during the biggest CPA talent shortage ever. Milos Milosavljevic is a productivity author and researcher who is passionate about topics such as time management, productivity, and healthy habits. Using the power of writing, he aspires to help individuals improve their work output and achieve perfect work-life balance. Companies that choose to run payroll semi-monthly pay their workers on a fixed date every month (1st and 15th or 15th and 30th).