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The difference between biweekly vs bimonthly payroll

Sunday, December 07, 2014

Choosing the right pay schedule for your small business

Running your own business can be tedious. One of the biggest tasks you’ll face is payroll and how you’ll pay your employees. Two standard payroll options are biweekly pay and bimonthly pay. Keep in mind that each of these options has pros and cons, and your business has its own unique needs to consider. But in this article, we’ll go over each pay schedule to help you determine which is best for your small business, including the advantages and disadvantages of each. To start, let’s look at biweekly payroll.

What is biweekly payroll?

Biweekly pay means paying your employees every other week. With biweekly pay periods, business owners like you deliver paychecks on the same day – usually Fridays – every other week. Depending on your business, you may elect to pay your employees on a different day. If you choose to pay your employees on a biweekly basis, you’ll end up with 26 pay periods. This means that most months have two pay periods per month, but two months will have three pay periods in the month. Now that you know more about biweekly pay let’s look at the advantages and disadvantages of running a biweekly payroll.

Advantages of biweekly pay

When it comes to paying employees, some of the biggest advantages of biweekly pay include:

  • More consistent pay schedule: When it comes to biweekly pay, employees know they’ll have payments coming on the same day every other week. That gives them reliability and consistency. For employees, that reliability can help them manage their finances. Having a set day they know they’ll get paid can help them feel more secure as an employee at your company.
  • More paychecks for employees: Biweekly pay also equates to more paychecks. Although employees get paid less per paycheck, they feel like they get two “bonus” paychecks per year.
  • Easy to calculate overtime: Paying employees on a biweekly pay schedule makes it easier for employers to calculate overtime. That’s because you’re calculating the prior weeks instead of having to calculate overtime that may fall between two semimonthly pay periods.

Disadvantages of biweekly pay

While there are advantages of biweekly pay, there can also be a few disadvantages. The most notable disadvantages are:

  • Possibly complicated bookkeeping: More pay periods in a year means two months with three pay periods. And while that’s great for employees, it can complicate bookkeeping for your business. That’s because your debits and credits might not match up. It also means running payroll an extra time in the month during those two months.
  • Harder budgeting: Because there are two extra paychecks on a biweekly payroll schedule, budgeting can be more difficult for your small business. You’ll need to ensure you have enough money in your bank or payroll account to cover these extra paychecks.
  • Potentially higher costs: With running payroll more frequently, businesses like yours may incur higher costs depending on their payroll provider. To combat this, it’s important to discuss these costs with your payroll provider.

Now that you know more about biweekly payroll, let’s compare bimonthly pay.

What is bimonthly pay?

Bimonthly pay refers to paying your employees twice per month. While this is sometimes referred to as semimonthly pay, it’s the same thing. Bimonthly pay results in 24 pay periods throughout the year. Unlike biweekly pay, when employees receive paychecks on the same day of the week, bimonthly pay means employees get paid on specific dates. Typically, that means that pay dates fall on the first and the 15th of the month. But, that means employees can get paid on different days of the week.

Now that you know more about bimonthly or semimonthly payroll, including the difference between bimonthly and biweekly pay, let’s consider the advantages and disadvantages of bimonthly pay.

Advantages of bimonthly pay

When it comes to paying employees, some of the biggest advantages of bimonthly pay include:

  • Larger paychecks for employees: Because you pay employees twice per month, your employees will get larger paychecks. This doesn’t mean you’re paying them any more money than biweekly paychecks. Because bimonthly pay means 24 pay periods instead of 26, each paycheck will be larger.
  • Less payroll processing time: Because you’ll be processing fewer pay periods, you’ll slightly reduce the amount of time you spend on payroll processing. That means less time spent on payroll for you or whoever is in charge of payroll at your business. This can also mean fewer processing errors.
  • Easier deduction management: Another benefit of semimonthly pay is more straightforward deductions such as healthcare and benefits. That’s because benefits typically run monthly, so it’s a little easier to deal with these benefits than on a biweekly pay frequency.

Disadvantages of bimonthly pay

As you can see, there are some definite advantages of a bimonthly payment schedule. However, there can also be a few disadvantages. Here are the most significant disadvantages of paying employees on a bimonthly basis:

  • Difficult to calculate pay for hourly employees: One of the biggest disadvantages of bimonthly pay schedules is calculating hourly employee pay, especially if they earn overtime pay. That’s because you have to account for the entire pay period (which can change) and not just two weeks.
  • Inconsistent pay schedule: Employees like consistency, and the day employees get paid can change with a bimonthly pay schedule. This can make it difficult for employees to track when they get paid. It can also make it more difficult for the person managing payroll to track when they should process payroll.
  • Difficult to calculate on weekends or holidays: With bimonthly pay, there’s a chance payday falls on a weekend or holiday. In this case, you’ll need to pay employees either before or after the weekend/holiday. That can add to more payroll processing time and can cause confusion in your business.

As you can see, there are advantages and disadvantages to both biweekly and bimonthly payroll. So you might wonder, “Which is better for my business?” The answer is that it depends. If you mostly employ hourly workers, your business may benefit from running biweekly payroll. However, bimonthly pay might help your small business if you have salaried employees. Ultimately, how you pay your employees comes down to the right solution for your business. After reading this article, you’ll be able to determine the solution that makes the most sense for your business.


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