Biweekly vs. semimonthly payroll—what’s the difference?
Most businesses pay employees approximately twice a month. However, there’s a difference between two monthly paydays on a biweekly schedule versus a semimonthly schedule. On a biweekly schedule, employees receive their paycheck every two weeks on a consistent day of the week (for example, Friday) throughout the year. The biweekly schedule means that there are two months each year where employees get paid three times rather than two.
When employees are paid on a semimonthly schedule, they always receive two paychecks a month, but the amount of the payment varies because certain months have more working days than others. They also likely receive payment on a specific date of the month rather than on a day of the week. For example, they’ll receive payment on the 15th and 30th of each month, regardless of which weekday those dates fall on.
How to decide between semimonthly and biweekly payroll
There are pros and cons to each pay schedule, both for an employer and their employees. Take a look at the benefits payroll biweekly vs. semimonthly can offer to decide which is right for your business.
Pros of biweekly payroll
Biweekly pay is the most common payroll schedule among U.S. employers, with 36.5% opting for this method over semimonthly, monthly or weekly pay.
More frequent pay
When you pay employees biweekly, they receive 26 paychecks each year. For employees, this is an attractive option because regardless of how many days there are in a month, they know exactly when to expect their paychecks and can budget accordingly.
Consistency
Consistency is a huge benefit of doing payroll biweekly. Employees know when they will get paid each month and exactly how much that paycheck will be. Your accounting team can always process payroll on the same day of the week. This makes scheduling work tasks easier for that department and the company as a whole.
More attractive to employees
Businesses with a biweekly payroll schedule may appear more attractive to prospective employees and have an easier time retaining the ones they already have. The predictability of a biweekly paycheck makes it easier for workers to budget in their personal lives and ensures they are paid more frequently.
Cons of biweekly payroll
Despite biweekly payroll being the most popular option among U.S. employers, there are a few potential setbacks.
Higher pay for two months annually
When you operate on a biweekly pay schedule, there are two months each year where employees are paid three times rather than two. Though you know how much that paycheck amount will be, your business needs to budget for paying out extra in those months so your revenue isn’t negatively impacted.
Hidden costs
Some payroll providers charge a fee each time you process these payments, so there’ll be a higher overhead cost than for employers opting for semimonthly payroll because there are two additional pay periods annually.
Pros of semimonthly payroll
Semimonthly payroll is the third most popular option among U.S. employers, behind biweekly and weekly payroll. Just 19.8% of employers choose to operate this way, but there are still some benefits to adopting the semimonthly payroll model.
Higher paychecks and only 24 paydays annually
For employees, a pro of semimonthly payroll is likely to be that the paycheck amount itself is higher than when paid on a biweekly basis. This also benefits the employer. Although the amount may be slightly higher, there are predictably two paydays every month of the year, resulting in 24 paydays annually. This means the organization doesn’t have to pad the budget for an additional pay period twice annually.
Less time spent on payroll
The 24 paydays per year can also benefit your company because there are two fewer pay periods that your accounting team must dedicate time to.
Cons of semimonthly payroll
There are also a few cons to consider when opting for semimonthly payroll.
Inconsistency
The inconsistency of a semimonthly paycheck can make your company less attractive to employees, despite the slightly higher amount they receive on these paychecks. Receiving pay semimonthly means that each paycheck may have a slightly different amount, and employees cannot count on receiving the payment at a concrete time.
More challenging to calculate payments
For the employer, opting for semimonthly payroll can make it difficult to calculate payment amounts, especially if your employees work on an hourly basis and may incur overtime pay.
Three alternatives
If biweekly and semimonthly aren’t appealing to you, consider these three alternative payroll options.
Weekly
Weekly payroll is the second most popular option in the United States, with 32.4% of private businesses opting for 52 pay periods each year. Weekly payroll makes it easy to predict the paycheck amount your staff receives because the pay period is shorter.
Monthly
Monthly payroll results in 12 pay periods each year, leaving room for inconsistency in paycheck amounts but allowing employers to spend less time processing payroll. Of U.S. employers, 11.3% use this method.
Per project
If you’re hiring employees for specific projects or you’re working with contractors and freelancers, you may find it easier to pay on a per-project basis. Have workers submit invoices for hours worked and the required payment amount. This means you can keep your salaried employees on a regular pay schedule but pay contractors or freelancers only when they’ve completed the project or task.
