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What are the advantages and disadvantages of semi-monthly payroll and a bi-weekly payroll?
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2 Answers
The advantages are that people are paid every other week. You may also get a slight postive benefit in cash flow as you are paying out smaller amounts twenty four times a year, then you have to cover the additional two payrolls which is the catch-up. Problems are that is is somewhat of an accounting nightmare in that you have to accrue and then reverse the last few days in the pay period unless it happens to fall on the end of the month. There is also an additional administrative burden in that you have to produce twenty six payrolls a year versus twenty four with a semi-monthly payroll. Personally I prefer a semi-monthly payroll.
I agree with Jim, a semi-monthly payroll is much easier on the accounting side, and does save the cost of additional payroll processing (though this is usually negligible in the big picture). That said, if your company has a lot of hourly employees that are typically paid a week or two in arrears, then a bi-weekly payroll is better aligned to support that.
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