Semi-Monthly Payroll: Everything You Need to Know

Today, lots of options to finish your payroll services and stay worry-free. Many companies have opted for semi-monthly payroll in order to save money and keep employees satisfied. This unique payroll system reduces accounting costs and simplifies employee deductions, making it easy to manage all the business finances efficiently. By providing evenly distributed salaries, the semi-monthly payroll system also helps employees manage their monthly expenses easily. 

However, many business owners are still unaware of semi monthly meaning. 

 If you are among those, you have landed at the right platform. We have got you covered. So, let’s dive in.

What is Semi Monthly Payroll 

A semi-monthly is a payroll system in which payment is scheduled to be given twice a month. The employees get their wages in two paychecks, resulting in 24 paydays annually. In this system, the paychecks given to employees on the first and 15th of the month or the last day of the month and 15th of the month. The date of payment may vary slightly in case of weekends or holidays. Companies distributes paychecks on the predetermined dates to their employees. However, the day of the week may vary from month to month, but the system remains consistent throughout the year. In this semi-monthly payroll system, employees get 24 paychecks in a year.

As the research revealed that approximately 20% of the US companies are opting for this semi monthly payroll system, making it a great option for salary-based roles. Using this system, employers can streamline their payroll and offer estimated payments to their employees helping them in proper budgeting and making financial planning.

How Does Semi-Monthly Payroll Works

Knowing the semi-monthly meaning and how it works is essential for any business before opting for it. Here is an overview of what semi-monthly means and how it works

• Pay periods in semi-monthly payroll system:   To conduct semi-monthly payroll, every month is divided into two pay periods, and payday will be on the first or the 15th of the month.

• Monthly pay:  In monthly payment systems, employees get their salary by the end of the month, which is divided into two paychecks in the semi-monthly payroll system.. For example,  when a person gets $4,000 monthly, then it would be $2,000 in each payday in semi-monthly payday.

• Yearly paychecks: In semi-monthly payroll, employees will get 24 paychecks by the end of the year.

How to Calculate Semi-Monthly Payments

Here is how semi-monthly salary is derived

• Determine the semi monthly salary:   Assess the monthly salary of the employee and divide them in two parts, which is the amount the employee earns in two paychecks, usually on the 15th and the last day of the month.
• Derive the number of workdays in a semi-monthly period:   In general, a standard workweek is five days.
• There are approximately 21.67 workdays per month 
• Again, divide them in two parts, and half of that would give you 10.83 workdays in a semi-monthly payroll.
• Now divide the semi monthly salary by 10.83

For example, when someone earns $3,000 in semi-monthly pay it means his daily pay would be: 3,000 / 10.83 = 276.91

Henceforth, the daily pay for a $3,000 semi-monthly salary is approximately $276.91.