Difference between Bi-weekly and Semi-monthly payrolls

Today I want to talk to you about pay periods, this is something that for some reason confuses a lot of folks and I couldn’t understand why it can be a little confusing but it is important to understand the difference between bi-weekly and semi-monthly payrolls

when you are going into bankruptcy, the reason is very simple bankruptcy is a lot about maths

difference between bi-weekly and semi-monthly payrolls

Difference between Bi-weekly and Semi-monthly payrolls

Bi-weekly means you’re getting at 26 paychecks because again you’re even paid every two weeks and since there are 26 biweekly

pay period 52 weeks in a year 26 by weekly pay period is during that time then you’re going to get basically 26 pay periods

which means that in two months you’ll have three pay periods and a lot of people what they do is they budget based

on having two pay periods in months and that third one is kind of when they catch up or they use that money for extra things like that

the problem is in bankruptcy we do budgeting based on the months so if you have three pay period months then you’re obviously

going to have a lot of extra for that particular month but what we do is we average is out instead of having just two pay period

in a month you are really having two plus four senators when we do a budget using biweekly pay periods the amount of

the money you are seeing every month in our budget when you do an average is actually more on paper than you actually really see

because again you’re seeing, in reality, two paychecks per months but for purpose of budgeting we’re averaging in those two months

where you have three pay periods, for example, you May $2000 as monthly pay periods but when you average it out

over the course of the year that may end up being $2300 something like that so you actually end up with more on paper

then you will have in real life.

Difference between bi-weekly and semi-monthly payrolls Pay Explained

“if you multiply your bi-weekly pay by 26 pay periods, then divide by 12 months, then you will show more DISPOSABLE INCOME then you actually see during a 2 paycheck month”

Example: $2,000 earned

Bi-weekly = $4,333 per months but

$2,000 earned semi-monthly = $4,000 per months

so when we do a budget we’ve got to use the average a real-life of course you’re using what you actually see.

so it is important to know the  difference between bi-weekly and semi-monthly payrolls

BUDGET & EXPENSES

when we sit down to do a budget we can factor in the

actual expenses on the course of months as well as income over the course of the months.

so we won’t show any disposable money when in fact you don’t really see any disposable money.

so again it gets a little tricky but the bottom line means that we’ve got to be real careful in doing our budget

we’ve got to really figure out how that works so that we show an accurate budget and this is again where we look at bankruptcy

over the course of the long term meaning, we want to factor in things like a new roof you may need or dental expenses

you may have or car repairs tires things like that, that’s a good way to use funds that don’t really exist in real life

except for those two months, we have three pay periods but in reality, you’re basing your budget on to pay two paychecks

months because that’s what you get most of the time, so again it’s important to know the difference between bi-weekly and semi-monthly payrolls

so again we can talk about the details when we sit down to do a budget but for now, just be aware that there

is a big difference between bi-weekly and semi-monthly payrolls and you need to know which way you’re

getting paid so that the budget we do in bankruptcy can be done properly.

How many bi-weekly payments in a year and how it works?

Bi-weekly pay periods occur once every two weeks and There are a few months under this pay period schedule where employees will receive three paychecks instead of two.

so every employee receives 26 paychecks per year.

Bi-weekly pay period = 2 or 3 paychecks per month or 26 paychecks in a year

Typically every employee receives their paychecks on a specific date of the week and it is usually on Friday.

paychecks will represent 80 hours of work.

How many semi-monthly payments in a year and how it works?

semi-monthly payroll schedule, employees are consistently paid twice per month, employees receive 24 paychecks per year.

Employers generally issue checks on the 1st and 15th of the month, or the 15th and the last day of the month.

Semi-monthly pay period = 2 paychecks per months or 24 paychecks in a year

There won’t be any months where you are getting extra paychecks. Typically checks were issued on the 1st to the 15th day of the month.

Under the semi-monthly pay period, employees typically have higher paychecks compared to a biweekly pay period.

The Pros and Cons of Bi-weekly payroll

Pros

  • Employees get a clear idea about when they’ll get paid and you know when you need to process payroll
  • It is more efficient in time/cost then weekly pay
  •  Each pay period pays full-time hourly employees approximately 89 hours per pay period.

cons

  •  It might not be easier to budget payroll as managing monthly benefit premiums can be complicated
  • Administrators must pay careful attention to pay dates
  • you have to account for time spent on the extra paycheck a few times a year.

The Pros and Cons of semi-monthly payroll

Pros

  • Employees usually have higher paychecks compared to a biweekly pay period.
  • Employees and employer always have a clear idea about payroll dates
  • There is no Leap year causing complication so the schedule is consistent and regular.

cons

  • It makes it more challenging for employees to budget based on payday changes.
  • Calculating overtime can be challenging and it could make running payroll slightly more confusing.
  • Due to Bank holidays, the payroll dates need adjustment.

conclusion

Hope you all get a clear idea about the difference between bi-weekly and semi-monthly payrolls and at last,

I want to add something that whichever pay schedule you have for your business,

it’s essential to set aside enough time to run and make sure that your employees are paid on time.

on time know the best payroll schedule, the one that works best for you.

You’ll also want to keep an eye out for bank holidays so that you can be sure to run payroll early if needed.

 

 

 

 

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