Semimonthly vs Biweekly Payroll

There is often some confusion between semimonthly and biweekly payroll and what the differences are between the two of them.

In a nutshell: a semimonthly payroll is paid twice a month, which means there are 24 payments per year:

Semimonthly = 12\: months \times 2 = 24\: payrolls

Biweekly payroll, on the other hand, is paid every two weeks. Since there are 52 weeks in the year, a biweekly payroll is paid 26 times per year:

Biweekly = \dfrac{52\: weeks}{2} = 26\: payrolls

Semimonthly Payroll

Semimonthly Payroll Benefits

From a pure efficiency perspective, semimonthly is a better payroll option the company has to prepare and process fewer payrolls per year.

On top of that, semimonthly makes it easier to apportion employee salaries to the correct months and there is less of a need to do month-end entry adjustments.

Semimonthly Payroll Payment Schedule

Semi obviously means half, so it stands to reason that a semimonthly payroll will be paid half way through the month, and then again at the end of the month. A typical semimonthly payroll cycle would be:

  1. First payment on the 15th of the month
  2. Second payment on the last day of the month

If one of these dates were to fall on a weekend, you would typically process the payroll on the preceding Friday.

Semimonthly Payroll Example

John’s Tyre Barn pays their employees semimonthly on the 15th day and the last day of every month. Megan was just hired to the Marketing team at an annual salary of $60,000.

We know that a semimonthly payroll has 24 total payments, so we can calculate the gross salary Megan earns for each payday:

Semimonthly\: Salary = \dfrac{60{,}000}{24} = \$2{,}500

Biweekly Payroll

Biweekly Payroll Benefits

A biweekly payroll is better for the employee because they have an improved cash flow when being paid every two weeks and receive two “extra” paychecks compared to the semimonthly alternative.

Although semimonthly is more efficient due to less payments, biweekly is better for the company at an organizational level because you know that payroll is going to processed on the same day of each week.

With semimonthly payroll, the processing days change because the 15th of the month is not always going to fall on the same day.

Biweekly Payroll Example

John’s Tyre Barn wants to try biweekly payroll for a Jack, a new employee in the Marketing team. Jack has been hired at the same compensation level as Megan, with an annual salary of $60,000.

We know that a biweekly payroll has 26 total payments, so we can calculate the gross salary Jack earns for each payday:

Biweekly\: Salary = \dfrac{60{,}000}{26} = \$2{,}307.69

Combining Semimonthly and Biweekly Payroll

There is no one approach to payroll scheduling and some companies will use a combination of both.

Semimonthly is the most commonly used payroll for salaried workers, but for hourly workers the biweekly payroll if often chosen instead.

From a pure efficiency standpoint, the main objective of the company is to use these payroll cycles to limit the number of payrolls they have to process. For example, processing payroll every week would be a very costly and time-consuming process for the payroll staff. Cutting that number down by at least half means a much more efficient payroll operation.

Semimonthly vs Biweekly Payroll Conclusion

  • Semimonthly payroll is paid twice a month, which means there are 24 payments
  • Biweekly payroll is paid every two weeks, which means there are 26 payments
  • Semimonthly is more efficient due to fewer payrolls being processed
  • Semimonthly payroll also makes it easier to apportion salaries to the correct month
  • Biweekly is better for the employee as it improves their cash flow and gives two “extra” paydays
  • Biweekly payroll is also easier to process as the preparation happens on the same day of the week
  • Companies will sometimes use a combination of the two depending on the business needs or the needs of the employees