Do you pay your employees by the week, or do you pay systemically?
When it comes to selecting a payroll schedule that works for you and your employees, you may feel overwhelmed. There are many payroll types to consider, including weekly, bi-weekly, semi-monthly, and more.
But which one is the best one to use for your business? For many small businesses, bi-weekly paychecks make the most sense. But still, you may consider switching to semi-monthly. You may even have considered even monthly payroll checks.
So, what’s right for your business? Keep reading to learn all about the differences between semi monthly vs bi weekly payroll.
What Is Semi Monthly Payroll?
A semi-monthly payroll is a system where an employee is paid two times a month, typically on the 15th and the last day of the month. The advantage of this system is that it can help to even out an employee’s cash flow, making it easier for them to budget and plan for their expenses.
The downside is that it can create a lag in payments if an employee is unable to work on one of their days off. It can also lead to a situation where an employee has to wait almost two weeks to be paid for their work.
What Is Bi Weekly Payroll?
Biweekly payroll is a payroll schedule where employees are paid every other week on a set day. For example, if an employee’s biweekly pay date is Friday, they will receive their paycheck on the following Friday. If there is a holiday on the employee’s pay date, they will usually receive their paycheck on the last business day before the holiday.
Despite its name, biweekly payroll can be processed more or less frequently than once every two weeks. For example, a company may process payroll every two weeks, but they may pay employees monthly. In this case, the payroll would still be considered biweekly.
The main advantage of this is that it can help businesses manage their cash flow. By aligning payroll with the company’s income, businesses can better predict and plan for their expenses. Biweekly payroll can also help businesses save on costs, as they can avoid the need to issue paper checks and process manual payments.
The Pros and Cons: Semi Monthly vs Bi Weekly Payroll
When it comes to getting paid, most people understand the basic differences between semi-monthly vs bi-weekly payroll. For the most part, it boils down to how often you get paid and how much you get paid each time. But some other key differences can impact your bottom line, depending on which system your company uses.
With semi-monthly payroll, you’ll typically get paid twice per month, on the 1st and 15th. Bi-weekly payroll means you’ll get paid every other week, typically on Fridays. The number of pay periods per year is the same for both systems – 24. But, because there are more days in a month than there are in a week, you’ll typically receive more pay with semi-monthly payroll.
You should consult with your accountant or on payroll services for small business to determine which payroll cycle is best for your company.
Which Is Best for Your Business?
There are several differences between semi monthly vs bi weekly payroll. The most significant difference is semi-monthly payrolls have 24 pay periods, while bi-weekly payrolls have 26. This can affect your employees’ take-home pay and your business’s budget.
Follow this guide in order to know which is best for your business.
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