Bimonthly vs. Biweekly Pay: Advantages and Disadvantages
By Indeed Editorial Team
Updated February 24, 2021 | Published September 25, 2020
Updated February 24, 2021
Published September 25, 2020
Many businesses decide on a particular period that determines how often they pay their employees throughout the year. As a business owner, it's important to reconsider your approach regarding your pay schedule. Keep in mind that the approach that works for one business and its employees may not work for another. Understanding a biweekly pay schedule versus a bimonthly pay schedule, for example, can help you determine which provides you with the most benefits. In this article, we define biweekly pay, bimonthly pay and explain the pros and cons of both pay schedules.
What is biweekly pay?
Biweekly pay periods refer to schedules wherein a business delivers checks to its employees on the same day every other week. Though most businesses pay their employees on Friday, the exact day varies by employer and their particular preferences or the nature of their business. When businesses run on a biweekly pay schedule, they have 26 pay periods per year. While most months have two pay periods, two months of the year feature three pay periods.
Related: What Is Biweekly Pay?
Which pay schedule is more common?
According to the Bureau of Labor Statistics' 2019 data, 42.2% of U.S. private establishments run on a biweekly pay schedule. In comparison, 18.6% of private establishments run on a semimonthly or bimonthly pay period. It's also worth noting that the use of the most common pay period, in this case, biweekly pay, tends to rise with the size of an establishment.
What is bimonthly pay?
Bimonthly pay typically refers to a pay schedule wherein employees get paychecks twice per month. Also known as a semimonthly pay period, a bimonthly pay period results in 24 pay periods per year.
With this type of payroll, employees get paid on specific dates, which results in pay processing on different days of the week. In other words, you can get paid on a Friday and then a Wednesday. Typically, pay dates for this schedule are approximately 15 days apart. For example, employees can get paid on the first day of the month and then again on the 15th of the month.
How do wages differ with a biweekly or bimonthly pay schedule?
The amount of money an employee receives per paycheck may fluctuate depending on their employer's pay schedule. However, they ultimately get paid the same amount in a given year. For example, let's say you make $40,000 per year. To determine how much you get paid each pay period, you can divide your wages by the number of pay periods your employer offers. If you get paid biweekly, you can divide $40,000 by 26 pay periods to get approximately $1,538 in gross wages every other week. If you get paid bimonthly or semimonthly, you'd receive approximately $1,667 in gross wages. Though these amounts differ, you end up receiving the same amount of money by the end of the year. You also have to pay the same amount of taxes no matter what pay schedule you're following.
Biweekly vs. bimonthly pay
Even if you have a pay schedule you're accustomed to, you can always change it to fit your particular needs. Keep in mind that regardless of the pay schedule you choose, employees get paid the same amount each year. To help you determine which to follow, consider the following pros and cons for both a biweekly and bimonthly pay schedule:
Biweekly pay schedule advantages
Understanding the advantages that come with a biweekly pay schedule can help you discern which frequency is best for your business and your employees. Consider these advantages that a biweekly pay schedule presents:
Greater consistency: With a biweekly pay schedule, employees know they have paychecks coming on the same day every other week. With a semimonthly pay schedule, employees may get paid on the same dates every month, but these dates may land on different days of the week. Having consistency in this regard can help employees better manage their finances.
More paychecks: Though you have smaller paychecks each pay period compared to a bimonthly or semimonthly pay schedule, biweekly pay equates to more paydays and therefore, two "bonus" paychecks. Even though you make the same amount of money regardless of your pay frequency, a biweekly pay schedule makes it easier to reduce debt or save more money in the months you receive an additional paycheck.
Easy to calculate overtime: While salaried employees are exempt from collecting overtime, hourly employees are not. Running on a biweekly pay schedule makes it easier to calculate overtime pay compared to businesses running on a bimonthly pay schedule. For example, if an employee's extra hours fall between two different semimonthly pay periods, you need to make adjustments to account for this which can result in confusion for the person handling payroll.
Bimonthly pay schedule advantages
Just as with a biweekly pay schedule, a bimonthly pay schedule also comes with several advantages for both employees and employers. Here's a look at the benefits a biweekly pay schedule may provide both parties:
Larger paychecks: Though you only get paid twice per month, a bimonthly pay schedule yields larger paychecks. Keep in mind that even though your paychecks may be larger, you paid the same amount at the end of the year no matter your pay frequency.
Less processing time: Compared to a biweekly pay schedule, operating on a bimonthly frequency slightly reduces the amount of time spent on payroll processing. Essentially, you run payroll less often which results in less work for the person in charge of your company's payroll. This makes it easier to budget your payroll and can help reduce the likelihood of errors.
Managing deductions: Since benefits typically run on a monthly basis, a semimonthly pay frequency makes benefits such as healthcare deductions easier to manage. In comparison, running on a biweekly pay frequency means you have to take care of these deductions using the total amount of annual pay periods.
Biweekly pay schedule disadvantages
To get a better idea of what a biweekly pay schedule entails, it's important to consider any drawbacks it presents in addition to its advantages. Here are the disadvantages of a biweekly pay schedule:
Complicated bookkeeping: When you have 26 pay periods per year, it means you have two months that feature three pay periods as opposed to two. When this happens, it complicates bookkeeping and makes it harder to project your future cash flow. Essentially, your payroll debits may not always align with your payroll credits on your balance sheet. It also means you need to prepare for paying your employees the two months that feature a third paycheck.
Smaller paychecks: Since payroll on a biweekly pay schedule processes more frequently than it does on a bimonthly pay schedule, these paychecks are smaller. However, employees receive two extra paychecks per year to make up for it.
Harder to budget: Since you get two extra paychecks on a biweekly pay schedule, it can make it harder to budget if the business doesn't prepare for the months that result in three paychecks. Businesses who operate on this pay frequency need to verify that they have enough money in their payroll account to cover these expenses.
Potentially higher costs: Depending on the payroll provider, a business may incur additional charges for each payroll run. This can result in higher annual costs for businesses that operate on a biweekly pay frequency rather than a bimonthly pay frequency. To avoid this, it's important to select a payroll provider that allows unlimited payroll runs regardless of how often paychecks are dispersed.
Bimonthly pay schedule disadvantages
While a bimonthly pay schedule comes with several advantages, it also comes with many disadvantages for both employees and employers. Here are some of the cons that come from this type of pay schedule:
Difficult to calculate for hourly employees: Calculating pay for hourly employees comes with some difficulty—especially if they earn overtime pay. To avoid this, you can offer semimonthly pay to salaried employees and biweekly pay for hourly workers, though running on two different pay schedules can make it harder for the human resources department to handle.
Lack of consistency: With a bimonthly pay schedule, the day employees get paid differs each pay period. This makes it hard for employees to keep track of when they get paid. It can also cause a hindrance to the person running payroll and cause them to lose track of which day to process the payroll.
Difficult to calculate for holidays and weekends: If a payday falls on a holiday or on the weekend, the human resources department needs to pay employees in advance or delay their paychecks after the weekend or the holiday. This adds another element to their payroll processing duties and may cause confusion for both the payroll department and the employees themselves.
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