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Paying your salaried workers biweekly is tricky when you have to stop and factor in leap years. Over the course of years, the extra day in a leap year will have to be accumulated and added onto an extra paycheck. In this case, 26 times a year payments will become 27 times, adding additional costs to payroll processing. Semi-monthly payroll will always and only ever happen 24 times in a year. Another difference between semimonthly pay vs. biweekly pay is what day of the week you run payroll and which day employees receive their paychecks. When a semimonthly payroll is used, processing steps constantly shift around among different days of the week, since the pay date is not fixed on a specific day of the week.
So, before you make a choice, make sure you use this resource from the Department of Labor to check if a payroll schedule is mandated by your state. It’s important to note that semi-monthly pay is often confused with bi-monthly pay, but these two terms mean very different things. Bi-monthly pay means you’re only paying your employees once every two months.
How to choose a payroll schedule for your business
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. With a semimonthly payment schedule, employees always receive two paychecks each month. https://www.vizaca.com/bookkeeping-for-startups-financial-planning-to-push-your-business/ However, there are two months in the year where employees who are paid bi-weekly receive three paychecks in a month. With a biweekly pay schedule, there are two months in the year where employees receive three paychecks.
Then, if an employee starts on the 1st, they wouldn’t be paid until the end of the month. Others may choose to pay for the hours worked currently until the 15th. Either way, the full paycheck will be delayed for many new employees on a semi-monthly payroll cycle. As a result of the pay frequency difference between semi-monthly and bi-weekly payroll, semi-monthly employees receive 24 paychecks each year, while biweekly employees receive 26. However, this lack of consistency with semimonthly payroll can also be a turnoff for businesses and employees.
Bi-weekly vs. Semi-monthly – What’s the Difference?
The number of hourly, salaried, full-time, or part-time employees you have may influence your decision. Consider which employees make up the majority of your payroll before you choose your process. You may even choose to pay hourly employees biweekly but pay salaried employees semimonthly. Employers may find paying hourly employees on a biweekly schedule simpler.
