If your company follows the semi-monthly pay schedule, you’ll receive your paycheck two times in a month. One of the checks will be received in mid-month and the second check will arrive either at the beginning of the next month or on the last day of the current month. Usually, such payments are done on either the 1st or 15th day of the month or on the 15th and the final day of the month. Some states may not allow certain pay schedules or require a minimum pay period. Some states may also require employee consent and additional paperwork for certain pay schedules. Before deciding on a payroll schedule, research your state laws for any potential limitations.
With a bi-weekly payment, though, the payments are usually two weeks apart. Therefore, there are instances where there https://www.vizaca.com/bookkeeping-for-startups-financial-planning-to-push-your-business/ may be three schedules within one month. From biweekly to semi-monthly pay, there are plenty of options out there.
What is a pay schedule?
However, the two extra paychecks in a bi-weekly pay period cover this gap. The schedule when employees receive their paychecks and when you run payroll is also one of the differences between the two pay frequencies. Deciding between biweekly vs. semimonthly payroll can be a difficult one, especially because federal pay laws state that you must keep the same frequency throughout the year.
So, if you paid your employees biweekly, they’d receive their paychecks every other Friday. Employees typically ask the question “When will be the next pay schedule? Those kinds of issues go away if you are using the semimonthly pay because the employees have a regular schedule of payroll. Usually, companies pay their employees on the 15th and last business day of the month. To make payroll processes and employees’ lives easier, some employers will choose to pay both their hourly and salaried employees biweekly. On the other hand, others find it easier to pay their hourly employees biweekly and their salaried employees semi-monthly.
The Difference Between Biweekly & Semi-Monthly Payroll
In 2019, the Bureau of Labor Statistics said the bi-weekly pay schedule would be more common. From the data, 42.2% of companies run bi-weekly pay, while 18.6% are semi-monthly. Employers may choose bi-weekly pay because they only process paychecks once every two weeks. 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 (every two weeks). For a semi-monthly employee, you have to divide 2,080 by 24 pay periods (twice a month).
- Biweekly paychecks will be be for less money, but employees will receive the two additional paychecks to make up the difference.
- After knowing the differences between semi-monthly vs bi-monthly payroll cycles, businesses and employers can make a choice between the two.
- If you are running a semi-monthly payroll period, however, they know that they will receive a payment on the 7th and the 21st of the month.
- Getting two additional checks results in extra savings and better management of various expenses.
- You might have some wiggle room to tailor your approach based on employee type.