A biweekly payroll happens once every two weeks, such as every other Thursday or Friday. A semi-monthly payroll occurs twice per month, such on the 15th and last day of the month. Both payrolls have their advantages.

Processing Frequency

Normally, a year has 365 days; however, a leap year has 366 days. A biweekly payroll has 14 days and 26 pay periods, which amounts to 364 days. Over time, this difference of one day during regular years and two days during leap years results in a 27th paycheck for biweekly workers. A semi-monthly payroll always has 24 pay periods, which results in less time and money spent on running payrolls.

Accounting Preference

Companies often create monthly financial reports. Accounting departments typically prefer semi-monthly payrolls to biweekly payrolls. Whereas a biweekly payroll carries over into the next year, the end of a semi-monthly pay period usually matches with the end of the month, which is ideal for year-end processing. With a semi-monthly payroll, you pay payroll expenses monthly. With a biweekly payroll, the two “extra” paychecks per year require payroll expense accruals, so costs are recognized in the month they were incurred.

Benefit Calculations

Employee benefit premiums are typically due monthly. Voluntary deductions, such as health insurance, are easier to figure with a semi-monthly payroll, as employees are paid twice every month; their premiums stay the same. With biweekly payrolls, you must figure the deductions based on 26, and on occasion 27, pay periods; or remember not to withhold any deductions from the “extra” two paychecks.

Hourly Processing

A biweekly payroll is easy to process for hourly employees, as they are always paid for the same time frame. A semi-monthly payday is more difficult to process for hourly employees because some months have more days than others and paydays tend to vary. For example, a biweekly hourly employee works eight hours a day, five days a week, which equals 40 hours per week. You simply pay her for 80 hours each payday. Overtime is also easy to calculate for biweekly hourly workers. However, a semi-monthly hourly employee might get paid for thirteen days in one pay period and fourteen days in another. To make up the difference, three weeks of pay might be due on occasion. Some employers pay hourly semi-monthly employees for 86.67 hours each pay period and estimate overtime, then make adjustments on the next payroll. This process is risky, especially if an employee suddenly quits and does not have enough hours to offset the payment.

Employee Preference

Employees prefer a biweekly payroll because it is predictable, consistent and easy to understand. A semi-monthly payroll is confusing for hourly employees and time sheet submission dates are hard to predict. To help employees understand their semi-monthly pay schedule, some employers create and distribute semi-monthly payroll calendars. Salaried employees are usually fine with a semi-monthly payroll, as they are paid the same amount each pay period.

About the Author
