Semi-Monthly vs BI-Weekly Payroll: Whats the Difference?

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. A bi-weekly payroll schedule may work better for some businesses than others. It is also possible for employers to change their payday to a different day or change how often they pay their employees.

But before detailing how to structure semi-monthly pay for your company, it’s first important to clearly understand what semi-monthly pay means. Our services cover all aspects of your payroll process and payroll tax needs. I will use each of these words in a few example sentences to demonstrate how they should appear in context.

Paycheck amounts

Depending on whether you are a salaried, permanent employee, the total yearly salary may be divided into 24 checks by the employer. Weekly Pay- In a weekly pay period, employers need to pay their employees at the end of every week resulting in 52 pay periods annually. Deciding between biweekly vs. semimonthly payroll can be a difficult decision, especially because federal pay laws state that you must keep the same frequency throughout the year. The taxes taken out of each paycheck will be different for weekly, biweekly, and monthly pay periods, but the overall amount ends up the same. The hours and days covered can vary every pay period, which can complicate how you run payroll for hourly employees with overtime. When you run payroll on one specific date, some pay periods might have fewer or extra days.

As the https://www.bookstime.com/ owner, you would pick a designated payday, and then ensure that your employees get their paychecks on that specific day every two weeks. Weekly payroll is typically paid at the end of each week for hours worked during the previous week. As you can see in the table above, weekly pay periods are very popular in industries like construction and manufacturing. Running payroll on a biweekly schedule also has a few downsides. For example, when you pay employees semimonthly, you can count on paying the same amount to employees each month.

Hourly Payroll Processing

Depending on the semi monthly vs bi weekly, payday may happen on a Saturday, Sunday or holiday. This is not only confusing for employees, but requires extra work on the part of your bookkeeper to make sure you fulfill your legal obligations regarding paying overtime. This isn’t a problem with salaried employees, and you might consider using different pay schedules for salaried and hourly workers. 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. Because of the number of paydays, semimonthly paychecks are larger than biweekly paychecks.