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Bi-Weekly vs. Monthly Payroll: What You Need to Know

Posted On
12/11/2016
By
Chris Bibey

Setting up payroll for your company is easier today than ever before. All you have to do iscompare providers and make a decision based on your findings. Of course, there are important questions to answer along the way. Here is one that requires your full and undivided attention: how often will you pay employees?


If you don't yet know the answer to this question, it is important to consider the pros and cons of all your options. Your decision will have an impact on the company as well as each and every employee.

Many companies narrow their options down to bi-weekly and monthly payroll. They are aware that these are two of the most common payroll schedules, and feel that both provide enough benefits to be considered.

It goes without saying that your payroll company is capable of handling any schedule, including bi-weekly, weekly, monthly, and semi-monthly. On the flip side, you and your employees may not fully grasp the differences.

Paycheck Frequency

As the name suggests, bi-weekly means that employees are paid every two weeks, which typically works out to 26 paychecks per year.

With monthly payroll, employees are paid once per month or 12 times per year.

Note: it is important for employees to understand that they will be paid the same amount of money regardless of if you implement a bi-weekly or monthly payroll schedule.

Pros and Cons of Bi-Weekly Payroll

Let's start out with the two biggest benefits of bi-weekly payroll:

  • Predictable for employees
  • Being paid twice a month makes it easy for employees to budget personal expenses
  • Easy for employers to manage and run

Now, here are some of the drawbacks:

  • Does not coincide with calendar months, which confuses both employees and accounting departments
  • Some months will call for three paychecks
  • Can impact monthly budgets

Pros and Cons of Monthly Payroll

At this point, you have a solid grasp on the pros and cons of bi-weekly payroll. Here are the benefits of a monthly payroll schedule:

  • Only have to run payroll once per month
  • Employees know they will receive one paycheck per month and 12 per year, which helps everybody involved avoid confusion
  • Simple for employers to manage

On the other side of the equation, there are drawbacks of monthly payroll:

  • It can put a financial strain on employees, as they only get paid once per month
  • Salaried employees typically prefer to be paid more often, such as bi-weekly
  • Not suitable for hourly workers

Other Important Details

Even though you have some flexibility with both payroll schedules, here are some details that typically remain the same:

Hours Per Pay Period

  • Bi-weekly: 80 hours
  • Monthly: 173.33 hours

Payroll Date

  • Bi-weekly: every two weeks, usually on a Friday
  • Monthly: typically the last day of the month

Cost and Processing Time

  • With a monthly payroll schedule, your cost and processing time will be less than a bi-weekly schedule.

Final Word

There is no definitive answer as to which payroll schedule, bi-weekly or monthly, is best for your business and employees. There are pros and cons of both, along with other details that must be taken into consideration.

Regardless of which schedule you choose, it is important to be 100 percent confident in your decision. What matters most is that both the company and employees are comfortable with the payroll process.

Use our price calculator to determine how each payroll frequency would cost your small business.

Read More: Payroll Mistakes That Benefit Employees