Payroll refers to the expense on employees for a given period. It also includes any compensation and benefits provided to employees for their work. Usually, these payments occur at regular intervals. However, these intervals may differ from one company to another. Every company uses a different payroll system that dictates how often employees receive their payments.
Two of the most common systems used within payroll are semimonthly and biweekly payroll. While they may sound alike due to the similar terms, they are different in some ways. Before understanding the difference between semimonthly and biweekly payroll, it is crucial to understand both individually.
What is Semimonthly Payroll?
Semimonthly payroll refers to a payroll system where companies pay employees twice every month. Usually, the payments occur on specific dates within each month. Therefore, employees receive 24 paychecks (12 months x 2 payments each month) during the year. The semimonthly payroll system is common in many industries. However, the biweekly payroll system is more prevalent.
When companies implement a semimonthly payroll system, they set two dates for each month. For example, a company may decide to pay its employees on the 5th and 20th dates of each month. Every month, employees receive their paychecks on that date. In 52 weeks, employees receive their payments at an average of 2.167 weeks (52 weeks / 24 payments).
What is Biweekly Payroll?
Biweekly payroll is a payroll system where companies compensate their employees every two weeks. Usually, the company specifies the day of the week on which these payments occur. In the biweekly payroll system, employees get 26 paychecks (52 weeks / Every 2 weeks). Therefore, employees receive at least two more payments in the biweekly payroll system.
Unlike semimonthly payroll, employees receive their paychecks on specific days after every two weeks. For example, a company may pay its employees every two Tuesdays later. Therefore, employees receive a paycheck every two weeks in this system. The biweekly structure for payroll is one of the most prevalent structures used for payroll payments.
Semimonthly vs Biweekly Payroll: What are the differences?
The differences between the semimonthly and biweekly payroll come down to the frequency between both. However, the annual pay for employees remains the same in both systems. Therefore, the differences do not result in employees getting paid more or less than in the other system.
Overall, the differences between semimonthly and biweekly payroll include the following points.
Frequency
The primary difference between both systems is how often employees get paid. As mentioned, the semimonthly payroll results in 24 payments per annum. On the other hand, the biweekly payroll requires 26 payments.
Paycheck amounts
With biweekly payroll, employees will receive a lower amount on their paycheck. It happens since their annual payment gets divided over more periods. On the other hand, the semimonthly paycheck amounts will be relatively higher.
Structure
Companies set specific dates each month where employees will get paid in semimonthly payroll. This structure differs from biweekly payroll, where the payments occur on certain days.
Conclusion
Semimonthly and biweekly payroll are two structures used to pay employees. With the semimonthly payroll, companies compensate their employees twice a month. This structure results in 24 payments each year. On the other hand, the biweekly payroll requires companies to pay employees every two weeks. This structure results in 26 paychecks a year.
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