# Bi-Weekly vs Semi-Monthly vs Bi-Monthly Payroll – Difference

## Differences between Bi-Weekly Payroll, Semi-Monthly Payroll, and Bi-Monthly Payroll

Differences between Biweekly Payroll, Semimonthly Payroll, and Bimonthly Payroll are explained in the below table,

Differences between Biweekly Payroll, Semimonthly Payroll, and Bimonthly Payroll are explained in the below points,

1. The three payroll method has different pay periods as follows,

• Biweekly payroll: every other week
• Semimonthly payroll: twice a month
• Bimonthly payroll: once every two months

2. Each payroll method has a different number of payments per year as follows,

• Biweekly payroll: 26
• Semimonthly payroll: 24
• Bimonthly payroll: 12

3. Each payroll method has a different number of payments per month as follows,

• Biweekly payroll: for 10 months 2, for 2 months 3
• Semimonthly payroll: 2 payments per month
• Bimonthly payroll: 1 payment per 2 months

4. Payment usually happens on specific or different days in a week as follows,

• Biweekly payroll: specific day of a week
• Semimonthly payroll: different days of a week
• Bimonthly payroll: different days of a week

5. Some of the payroll methods are practical to use for non-exempt employee payments as follows,

• Biweekly payroll: can be used for non-exempt employee payment
• Semimonthly payroll: difficult to use for non-exempt employee payment
• Bimonthly payroll: different difficult to use for non-exempt employee payment

6. Calculation of the payment amount per pay period differs in each payroll method. As an example, let’s assume if an employee’s annual salary is \$78,000,

• Biweekly payroll: \$78,000 / 26 = \$3,000
• Semimonthly payroll: \$78,000 / 24 = \$3,250
• Bimonthly payroll: \$78,000 / 12 = \$6,500

7. Following are the best advantage for an employee in each payroll method,

• Biweekly payroll: employees feel more consistent
• Semimonthly payroll: payment method is easy to understand
• Bimonthly payroll: paycheck amount will be comparatively high

8. Following are the biggest disadvantage for an employee in each payroll method,

• Biweekly payroll: paycheck will be comparatively less
• Semimonthly payroll: not practical with non-exempt employees
• Bimonthly payroll: difficulty in personal budgeting
1. Bi-Weekly Pay Frequency
• Industries with hourly or shift-based work, such as retail, hospitality, and manufacturing, often use bi-weekly pay schedules. This frequency aligns well with these industries’ pay periods and allows for straightforward tracking of hours worked.
2. Semi-Monthly Pay Frequency
• Semi-monthly pay schedules are common in industries with salaried employees, such as professional services, finance, and education. These industries often have employees with fixed monthly salaries, making semi-monthly pay periods convenient for consistent pay distribution.
3. Bi-Monthly Pay Frequency
• Bi-monthly pay schedules may be more prevalent in industries with unique pay structures or specific payroll preferences. While less common overall, some government agencies, non-profit organizations, or small businesses may opt for bi-monthly pay schedules due to their simplicity or alignment with funding cycles.

## What is Bi-Weekly Payroll?

Biweekly payroll is when employees receive their pay every other week on an agreed day. There are 26 payments applicable for bi-weekly payroll, usually twice a month.

The entire year will be split into 26 separate pay periods in a biweekly schedule. Hence the employees get paid every two weeks instead of every week. In some months, the employees will get paid three times in one month with the payment schedule. There are always two months each year in which three paychecks are distributed and the other 10 months have two paychecks distributed.

## What is Semi-Monthly Payroll?

Semi-monthly payroll is when a business pays the employees twice a month, usually on the 15th and last day of the month. The payment generally happens out on the proceeding Friday if these dates fall on a weekend. Furthermore, employees’ annual salaries are split into 24 pay periods, results 24 equal payments throughout the year.

## What is Bi-Monthly Payroll?

Bimonthly payroll means that the company pays its employees once every two months. Employees in bi-monthly pay receive a salary every two months (six times a year).

According to the U.S. Bureau of Labor Statistics, biweekly payroll is the most popular in the USA with an estimated 43% of U.S. private establishments paying their employees. The second most popular is weekly payroll with 27%. Third and forth most popular are Semi-Monthly and Monthly pay schedules with 19.8% and 10.3%.

Most companies in the USA choose a combination of payrolls, using the semimonthly approach for fixed salaried employees and a biweekly payroll for hourly employees.

## Pay Frequency Requirements in the US?

According to CPA Practice Advisor, there are no pay frequency requirements at the American federal level. But some U.S. states have specific pay frequency requirements as following examples,

In New Hampshire, employers must pay employees wages on a weekly or bi-weekly schedule. Semi-monthly and monthly pay frequencies must be approved by the New Hampshire Department of Labor (NHDOL).

In California and Michigan, the frequency of pay depends on the occupation. In California, wages must be paid at least twice during each calendar month on the days designated as paydays (with some exceptions).

## How to Choose the Best Payroll Schedule for My Company?

1. Assess your cash flow: You have to consider your company’s financial situation and determine how frequently you can afford to pay your employees. A more frequent payroll schedule, such as weekly or bi-weekly, may require a more consistent cash flow compared to a monthly or semi-monthly schedule.
2. Consider employee preferences: You have to consider the preferences of your employees when choosing a payroll schedule. Some may prefer more frequent paychecks to better manage their finances, while others may prefer less frequent paychecks if they are used to monthly budgeting.
3. Evaluate administrative efficiency: Consider the administrative workload involved in processing payroll. A more frequent payroll schedule may require more time and resources for payroll processing, whereas a less frequent schedule may be more efficient administratively.
4. Review legal requirements: Make sure to comply with federal, state, and local labor laws regarding payroll frequency. Some jurisdictions may have specific requirements regarding the minimum frequency of paychecks. As example, in the United States, payroll schedules must comply with federal, state, and local labor laws
5. Test different schedules: You can consider testing different payroll schedules on a trial basis to see which one works best for your company and employees, if possible. This can help you assess the impact on cash flow, administrative efficiency, and employee satisfaction.
6. Consult with professionals: Consider consulting with payroll experts or financial advisors who can provide insights and recommendations based on your company’s specific needs and circumstances.

## Best Practices for Managing Payroll Periods

1. Consistency: You should maintain a regular and consistent payroll schedule to provide predictability for employees.
2. Compliance: You have to ensure compliance with federal, state, and local laws regarding pay frequency, overtime pay, and tax withholding.
3. Accurate Record-Keeping: You have to maintain accurate records of hours worked, wages paid, and deductions to facilitate payroll processing.
4. Communication: You should clearly communicate payroll schedules, pay rates, deductions, and any changes to employees in advance to avoid confusion and ensure transparency.
5. Automation: It is great if you can utilize payroll software or systems to automate payroll processing, reduce errors, and increase efficiency.
6. Review and Audit: You have to regularly review and audit payroll processes and records to identify and correct any errors or discrepancies promptly.
7. Employee Self-Service: It is a good practice if you can provide employees with access to self-service tools or portals to view their pay stubs, update personal information, and access relevant payroll documents.
8. Training and Education: You have to train payroll staff and managers on relevant laws, regulations, and best practices to ensure compliance and accuracy in payroll processing.
9. Vendor Management: If you are outsourcing payroll, carefully select and manage payroll service providers to ensure reliability, security, and compliance with legal requirements.
10. Feedback and Improvement: You can obtain solicit feedback from employees and stakeholders to identify areas for improvement in payroll processes and address any concerns or issues promptly.
• If the employee receives the payment via a bi-weekly method he/she will receive \$3,000 per paycheck (\$78,000 / 26 pay periods).
• If the employee receives the payment via a semi-monthly method he/she will receive \$3,250 per paycheck (\$78,000 / 24 pay periods).
• If the employee receives the payment via a bi-monthly method he/she will receive \$13,000 per paycheck (\$78,000 / 6 pay periods).
• If the employee receives the payment via a semi-monthly method he/she will receive \$3,250 per paycheck (\$78,000 / 24 pay periods).

• Bi-Weekly Payroll

• Bi-Monthly Payroll

• Semi-Monthly Payroll

• Differences of Payroll Methods