Understanding Bi-Weekly and Semi-Monthly Payrolls Career Advice

One isn’t better than the other, but I’m VERY aware of the difference. Personally I prefer semi-monthly paychecks; bills, rent, etc are all monthly expenses, and the bi-weekly schedule for paychecks ensure they often don’t match up with incoming expenses. When it comes to semi-monthly pay, you don’t get paid more but your paychecks will be slightly bigger. While semi-monthly pay won’t be consistent in the days of the week that you’re paid, it will offer consistency in the day of the month, assuming payday falls on a business day.

The result is that there is a two-week lag between the time when hours are reported and when the employee is paid. Employees who are already paid on a bi-weekly pay schedule are also not affected. Effective August 1, 2022, Lehigh University will move all non-exempt staffwho are currently paid semi-monthly to a bi-weekly payroll. Employees and students who are paid semi-monthly will move to a bi-weekly payroll. Lehigh University is changing its semi-monthly payroll to bi-weekly.

What is biweekly pay?

Employees who are paid semimonthly always receive two paychecks per month. Companies that run payroll with a biweekly frequency dole out a total of 26 paychecks per year. Companies that use semimonthly pay give employees 24 paychecks per year. You need to consider how many employees you have and whether those employees are hourly or salaried.

An employee’s tax liabilities won’t be affected by the length of their pay period. Total tax liability is based on the total amount earned in a year rather than on paycheck frequency. The same is true for payroll taxes on the employer’s end.

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. Here is a detailed bi-weekly vs semi-monthly pay differentiation. Before choosing, keep in mind that states regulate how often you must pay employees. You might not be able to use biweekly or semimonthly pay frequencies in certain states. Check with your state before choosing how often you run payroll.

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There are advantages and disadvantages to different pay frequencies, and what’s easiest for you may not jive with your employees’ needs. To make sure you make an informed decision, here’s a breakdown of common pay periods, along with the pluses and minuses for each approach. While employees will be paid more often, their paychecks will be smaller than on a semi-monthly schedule. Employers who pay employees semi-monthly will give them 24 paychecks each year. Again, even if you’re no accounting whiz, the numbers here are pretty straightforward.

There are some important differences when it comes to semi-monthly vs. biweekly payroll. Let’s first look at the unique attributes and benefits of the biweekly pay schedule. 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.

How to calculate biweekly pay

Your employees have expenses and need to plan out their own budgets, so you can’t blame them for wondering how many biweekly pay periods there are in a year. Biweekly pay is the most common option for pay periods, with 36.5% of private U.S. businesses paying their employees on this schedule. Accelerated bi-weekly payments are made every two weeks. The big difference here is that bi-weekly payments are made 26 times per year which is the same as one extra monthly payment, or 2 extra semi-monthly payments per year. The extra payments are applied directly against your principal thereby saving you interest and shortening the amortization of your mortgage.

Whether a person is a non-salaried full-time employee, the same figures hold true. The only difference between bi-monthly and semi-monthly pay periods is that each paycheck amount gets adjusted including time off or overtime took in a specific pay cycle. Now, if we discuss the biweekly pay schedule, the employee earning $50,000 yearly will get his pay divided across 26 pay cycles. Thus, each paycheck will be $1,923.08 before deductions every other week. The amount may seem to be less but then the employee is also getting two additional pay checks in a year.

Since there are two months with an extra pay period, your balance sheet might take some more work to even out. Fortunately, this is helpful information for you to have too. With payroll likely being one of your largest expenses, you want to know how many times each year you’ll need to cut those checks so that you can plan out your cash flow accordingly.

When to Use Semi-monthly

In August 2022, affected employees will receive their first bi-weekly pay which will reflect a smaller amount, because they will be paid more frequently. The Frequently Asked Questions below provide important information about when affected employees can expect to be paid as well as benefits and withholdings. Employees should carefully consider their personal situations and take any necessary action to avoid personal financial miscalculations.

• I just joined this semi-monthly book club, and the meeting is next week, but I haven’t read the book yet.
• So, if you paid your employees biweekly, they’d receive their paychecks every other Friday.
• Which equates to reduced employee paychecks and company savings.
• A monthly payment schedule is exactly what it sounds like.

For obvious reasons, paying your hourly staff biweekly makes it a much easier and less troublesome way to calculate your employee payment amounts. Yet, it is less expensive to process salaried workers semi-monthly. Remember, a semi-monthly payroll requires less processing, as it happens 24 times a year rather than 26 times a year, and so can save the company money. The hourly difference occurs because of the distinction in the number of paychecks the employees will receive. For a biweekly employee, you must divide 2,080 by 26 pay periods . For a semi-monthly employee, you have to divide 2,080 by 24 pay periods .

On ‘Biweekly’ and ‘Bimonthly’

It can be a good idea to start your new hires at the beginning of a pay period — when possible — to alleviate the need to prorate anything. Unless your state laws tell you otherwise, don’t feel like you’re locked into the same system for everyone. You might have some wiggle room to tailor your approach based on employee type. If you ever get stuck on anything, you can always come back here for a quick refresher.

• Two popular, yet easily confused, pay periods are biweekly and semimonthly.
• This change will result in a clearly defined two-week work period that includes both regular and exception pay.
• However, it is a wholly different thing to just cave in and say “the word by has taken on both meanings.” That is a cop out.

Knowing about bi-weekly vs bi-monthly payroll differences can help make the right decision. A biweekly payroll schedule will typically be seen in the eyes of your employees as “dependable” and “consistent”. Also, your payroll clerk will be able to keep a consistent schedule and pace with how they distribute them. The one downside to biweekly payments is the inconsistency in how much money you are paying out each month.

You need to make sure you’re complying with overtime requirements. And, you need to figure out the best payroll schedule for your business. Feel more secure with a set pay day as opposed to a pay date, which can be on any day of the week (as with semi-monthly paychecks). We recognize that for some employees, going four weeks without a paycheck could be a financial burden. To address this, the University administration has approved a one-time bridge payment on August 12th for employees affected by this payroll change.

Choosing your payroll provider

This might mean preparing the cheques or deposits on Friday to make sure they’re ready for Monday. Lower administrative costs as payroll is easier to manage than other pay periods. For, as anyone who pays attention to our work surely recognizes, we are at the mercy of the language. Biweekly and bimonthly each have a pair of meanings that are unhelpfully at odds with one another. OnPay has allowed us to easily complete the bi-weekly payroll for our full-time and part-time staff with confidence that related taxes are managed appropriately and accurately. It has freed up a ton of time to fulfill other responsibilities and projects to help our business grow.

Whether a business’s employees are salaried or hourly, it will likely make sense for them to choose one pay frequency over the other. For example, it can be more difficult to process the paychecks of hourly employees on a semi-monthly basis than on a bi-weekly basis. Because hourly wages are easier to calculate on a bi-weekly basis, as each paycheck accounts for the same number of days. Conversely, semi-monthly paychecks will vary in the number of days they include, making it more challenging for whoever handles the company’s payroll. Payroll processing for biweekly hourly employees is straightforward; however, processing for semimonthly hourly employees can get confusing. For biweekly hourly employees, simply pay the employee according to the number of hours he worked over the past two weeks.

It will be much net terms to calculate overtime when the entire week is all in the same pay period. This change will not affect exempt staff who will remain on a monthly payroll schedule. I don’t think words have devolved, I think people, specifically our literacy and attention to detail have devolved. Factor in an increase in cultural diversity and we have a society where a growing majority misuse words and, over time, redefine the English language.

Bi-monthly pay schedules see employees getting paid on specific dates, meaning that the day of the week they get paid on fluctuates. Monthly pay periods require businesses to process payroll only 12 times per year, compared to 52 times a year for those running weekly payrolls. However, for most employees, it is difficult to wait an entire month for a paycheck. For this reason, some states don’t allow businesses to pay their employees monthly. If you’re leaning towards a monthly pay date, be sure to check with theDepartment of Labor for your state’s requirements. A semi-monthly pay period means you’re paying your employees twice each month, often on the first and the 15th, but you’re free to set your own schedule.

You’ll have to remember to either pay your staff the Friday before or the Monday after the weekend…or run payroll over the weekend. Your employees will know when to expect their paycheck, every month, of every year. That can make it easier for them to plan their own personal budgets.