The regularity with which your small business is paid is a critical decision. The period with which you execute payroll and when workers receive their paychecks is determined by your pay frequency. Semimonthly vs biweekly pay periods are two popular, yet frequently mistaken with each other.
Semimonthly vs Biweekly Pay
The main distinction between a semimonthly and a biweekly payroll is that the former is paid 24 times per year, while the latter is paid 26 times per year. Typically, a semimonthly payroll is paid on the 15th and the final day of each month.
If one of these pay dates comes on a weekend, the payroll is distributed on Friday before. Every other week, on a Friday, a biweekly payroll is paid.
A biweekly schedule may appeal to some employees. Others might like a semimonthly schedule. Employees can manage their assets and resources better with a bi-weekly check.
Except on vacations, they can obtain their checks every 2 weeks on the same day.
We’ll look at the distinctions between biweekly and semimonthly pay schedules, as well as the benefits of each.
What Does Semi Monthly Payroll Mean?
Using this strategy, wages are paid twice a month. On the 15th and final days of each month, this is only done.
When contrasted to the bi-weekly system, payments are made less frequently with this scheme. This is because only 24 payments are made in a year. On the other hand, most firms make sure that no matter which strategy is used, the salary remains the same.
What Does Biweekly Payroll Mean?
Biweekly payroll is the practice of distributing paychecks on the same day every other week.
Workers will be given their salaries every other Friday if the selected payday is Friday, for a total of 26 paychecks throughout the year.
If you’re paid hourly, each paycheck will be different since it will represent the number of hours you worked throughout that pay cycle, inclusive over time.
What is The Difference Between Biweekly and Semimonthly Pay?
There are a few major differences between semimonthly and biweekly pay, so let’s go through them immediately.
Amount of Paychecks Received Each Year
Workers on a biweekly payment plan receive 3 paychecks throughout two months of the year. Semimonthly-paid employees typically receive 2 paychecks per month.
Businesses that pay employees biweekly distribute a total of 26 paychecks every year. Workers that are paid semimonthly receive 24 paychecks per year.
Payroll Processing on an Hourly Basis
It’s easy to handle biweekly hour employees’ payroll, but it’s a little trickier to manage semimonthly hourly employees’ payments.
To avoid confusion, most businesses provide semimonthly hourly employees with a payroll calendar that shows when semimonthly time cards must be completed for each pay period.
Because some months have 31 days and others have 30, a semimonthly hourly worker may be paid for a distinctive number of days on different occasions.
If you are unable to manage your employees’ payroll, then check out our Payroll Management Services.
The most popular payment option is biweekly payroll. 36.5 percent of employees are paid biweekly, according to the Bureau of Labor Statistics.
Only 19.8% of employees, on the other hand, are paid on a semimonthly basis.
Another distinction between semimonthly and biweekly pay is the day of the week on which payroll is processed and employees are paid.
Employees receive their earnings on the same day each pay cycle if you conduct a biweekly payroll. If your employees are paid every other Friday, you process payroll on the same day every paid month.
You pay employees on particular dates, such as each month’s 15th and last weekday, with semimonthly payroll.
The days, on the other hand, are different. An employee may be paid twice a week, on Friday and Tuesday.
Benefits of Semimonthly Pay
The following are some of the benefits of a semimonthly pay schedule:
- Constantly the Same Dates
- It’s Easier to Plan for Deductions
Benefits of Biweekly Pay
Many employees prefer a biweekly payment plan for a variety of reasons, including:
- It follows a pattern.
- Earnings boost
- Overtime pay is more straightforward to compute.
The Drawbacks of Semimonthly Payroll
You should think about how many staff you have and whether they are paid hourly or on a salary.
Doing a semimonthly payroll for hourly employees is more complicated and confusing than running a monthly payroll for salaried employees, especially when overtime pay is earned.
For some firms and employees, the lack of regularity with semimonthly payroll can be a turnoff.
The Drawbacks of Biweekly Payroll
Running biweekly payroll has its drawbacks as well. Employees can expect to be paid the same amount each month if they are paid semimonthly.
If you don’t adequately prepare for months with three paychecks, the extra two paychecks for biweekly pay frequencies can set your business back.
You must ensure that you have sufficient funds in your payroll account to cover the additional costs.
So this was all about semimonthly vs biweekly pay and their key differences.
Some companies use a hybrid payroll system, with semimonthly payrolls for salaried personnel and biweekly payrolls for hourly workers.
It’s beneficial to understand the difference between a semimonthly and a biweekly payment plan. You can now estimate how much money you’ll get in each paycheck, which will help you budget and plan for the future.