Bimonthly vs. Biweekly Pay: Advantages and Disadvantages
A man in a white shirt and blue tie is thinking with his hand under his chin. There are two lists titled "Biweekly Pay Vs. Bimonthly Pay" with the following bullets in two columns:
• Pay on the same day every other week
• More paychecks overall, but ultimately the same salary
• Easy to calculate over time
• Larger amount on each paycheck
• Streamline the internal process by decreasing the processing time and making it easier to manage deductions or benefits
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.
Which pay schedule is more common?
According to the Bureau of Labor Statistics' 2022 data, 45.7% of U.S. private establishments run on a biweekly pay schedule. In comparison, 22.4% 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. They ultimately get paid the same amount in a given year. For example, if 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 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 the business and its 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, so 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 aren't. 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 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 are 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 the company's payroll, which reduces 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 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, so the payroll debits may not always align with the payroll credits on your balance sheet and also means you prepare for paying 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. 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 that operate on this pay frequency 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, so 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 employees, 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, which 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 pays 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.
Frequently asked questions
When do you learn about your role's pay schedule?
Typically, you learn about the pay schedule for your role either during the interview process or after an employer acknowledges they want to hire you. You may learn this answer by asking questions during your interview or when the employer sends a contract for you to negotiate and sign.
Can you request to change your pay schedule?
Employees can't usually request to change their pay schedule, though a collection of employees making the same request can encourage the leadership of an organization to make the change.
Which pay schedule is better?
Neither pay schedule is better since it depends on the needs of the organization and its employees. As such, if you're creating an organization, carefully consider the needs of current and future employees and choose the system the organization can support.
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