Difference Between Semi-Monthly and Bi-Weekly PayrollDifferences You Need to Know Between the Two!
Semi-Monthly and Bi-Weekly Payroll are often confused by many.
Essentially, paying payroll twice a month and once every two weeks seems to be the same, but they are not.
There are distinct differences between the two.
Semi-Monthly payroll is paid twice a month, usually every 15th and 30th day of the month.
If these days fall on a weekend or a holiday, the payroll is processed on the last working day before the weekend or holiday.
On the other hand, bi-weekly payrolls are paid on the same day every other week.
If a company has chosen to pay the bi-weekly payroll on Fridays, then the payroll will have to be paid every other Friday.
Semi-monthly payroll is paid 24 times a year while a bi-weekly payroll is paid 26 times a year.
Advantages of Semi-Monthly Payroll
Processing payroll only twice a month will make it easier for payroll accountants to prepare the salaries on the same days every month.
This saves them the time to prepare set salaries for the employees for each month.
Although they have to be better prepared in case the paydays fall on a weekend and a holiday, they only make sure that they make the necessary deposits to make sure the salaries are funded.
Another advantage of opting for the semi-monthly payroll system is when it is for payment to salaried employees.
An employee who earns $7,000 a month will receive $3,500 on the 15th day and the 30th day and that will not change.
This helps employees know what to expect and how much to expect when they receive their paycheck.
Advantages of Bi-Weekly Payroll
Bi-Weekly Payroll is ideal for employees who are paid by the hour.
Those who receive their salaries on a set day every other week view bi-weekly pay as dependable.
In their minds, they view it as receiving an extra two weeks of paychecks each year.
From the point of view of the company, payroll accountants will find it more convenient to prepare the payroll every other week because they only need to follow the same steps to make salary payments, which in most cases is every other Friday.
There are some days when employees receive three paychecks in a month and that is highly favorable for the employees.
It allows them to have an extra week of budgeting for their expenses.