What is the difference between biweekly and semimonthly payroll?

It could take 4-6 weeks for a new recruit to get their first paycheck under a semi-monthly pay schedule, depending on when the hours clocked are processed. For hours worked from the preceding period , many employers pay on the 15th. An employee who begins work on the first of the month would not receive payment until the end of the month. If payday falls on a holiday or weekend, you will either need to advance or delay payroll, adding another responsibility to your plate. Knowing the difference between biweekly vs. semimonthly payroll can prevent financial setbacks, keep your business legally compliant, and more.

State laws dictate the types of https://www.bookstime.com/ment schedules companies are allowed to implement. For example, in Alabama and South Carolina, there are no specified regulations, so companies can choose whichever schedule they prefer. In other states, however, companies are required to pay their employees at least on a bi-weekly basis. The semimonthly payroll schedule is efficient since there are two payrolls per month to prepare.

Electronic Request for Payment (eRFP)

Because you will semi monthly vs bi weekly half of your pay earlier than in the monthly schedule, there is no need to adjust the timing of your current bill payments. Massachusetts allows for a tax deduction for Social Security and Medicare taxes up to $2,000. The MIT payroll system takes this deduction into account when calculating the Massachusetts state tax withholding amount. Once your Social Security and Medicare year-to-date balances reaches $2,000, your Massachusetts tax withholding will be slightly higher. This will occur each calendar year but is not related to the change in pay cycle. The pay date for March 2018 will be March 30, 2018 (this is the last month you will receive the entire month’s pay at the end of the month).

If employees get paid biweekly, then they would know to expect a payment, every other Thursday, for example. If you are running a semi-monthly payroll period, however, they know that they will receive a payment on the 7th and the 21st of the month. In the bi-weekly payment system, employees receive two extra checks at the end of the year to make up for the difference between the lesser amounts received in the first 24 paychecks. As an employer, to arrive at the hours for a biweekly employee, divide 2,080 by 26 pay periods.

Amount of Paychecks per Year

Pay dates of semimonthly payroll are commonly the 1st and 15th of each month or the 15th and the last day of each month. Some employees may choose to pay hourly semi-monthly employees for 86.67 hours, and then make adjustments on the next pay period. This, however, can be risky; for example, if an employee leaves your company without making adjustments, they will not pay back the estimated hours.

• However, when considering employee relations, companies usually prefer a bi-weekly payment method.
• When the bulk of an organization’s employees are paid on a salary, the semi-monthly pay usually functions best.
• The extra two paychecks for biweekly pay frequencies can make budgeting more challenging if the business doesn’t properly prepare for months with three paychecks.
• You need to consider how many employees you have and whether those employees are hourly or salaried.
• While taking care of their interests, they also need to give due consideration to the state regulations.