Difference between Biweekly and Semi-monthly payroll- which to choose?
Each small business needs to decide how often they would pay their employees. To do this, small businesses in the US can choose from biweekly, semi-monthly, weekly, or monthly payments.
The guidelines for wage payments vary from state to state; you need to pay at the time mutually decided, but not at a lesser frequency.
For many businesses, paying their employees on a biweekly or semi-monthly basis has to be decided to keep in mind the various aspects of each payment system. This is a dilemma that needs to be addressed before you hire any employee who will be paid in this manner.
What’s the difference between biweekly and semi-monthly payroll?
Biweekly means payday every alternate week while semi-monthly paydays occur on fixed dates, like the 15th and 30th of every month. For a biweekly payday, employees will know payday will come every other Friday, for instance.
On the other hand, the 15th and final day of the month may come on weekends or any public holiday, you will have to make sure you pay them every if your business is shut.
Though the total number of paydays isn’t of much difference- biweekly employees receive a total of 26 paystubs while semi-monthly employees receive 24 paystubs, what matters is how the paystub generator are used for each type of employee. You can create a paystub for every 80 hours worked if you aim to pay biweekly.
On the other hand, if you aim to pay semi-monthly, your employees will need their paystubs for every 86.67 hours. In total, every full-time salaried employee is compensated for about 2,080 hours every year.
How are the payrolls processed?
The payroll process for biweekly employees is pretty straightforward- he gets paid for the work put in hourly every two weeks. The situation with semi-monthly employees, is, however, a little different.
Here, you will need to work out a ‘payment calendar’ which specifically states which dates are paydays. This is because some months have 30 days while others have 31 days. For instance, semi-monthly employees will get paid for either 12 or 13 days every month.
To process the payrolls of the same, employers need at least a day or two to process the payrolls before declaring a day that will be the final payday.
This can be tedious, time-consuming, and conflict-prone if not done on time and without using a modern, state-of-the-art paystub generator.
If you have to pay your employees biweekly or semi-monthly, you will need to integrate various third-party software into your paystub generator.
This includes the employees’ attendance records, overtime records, and other software that calculates the taxes due and the amount to be paid for every employee.
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Though the decision to use a semi-monthly or biweekly payroll can be difficult, you will need to consider the various government guidelines and management necessities to conclude. It is recommended to consult an expert if things are way too complicated.