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| Name | What to Know When Giving Employee Bonuses |
| Video Uploader | Video From JWellsCFO |
| Upload Date | This Video Uploaded At 07-12-2020 17:00:03 |
| Video Discription | A business cannot give its employees gifts without including them in taxable income. I see this with some of my clients who want to reward their employees with bonuses, especially around year-end as a holiday bonus. The client will write a check from the business directly to the employee. This is problematic. Bonuses are wages subject to income and payroll taxes. In fact, bonuses are usually subject to higher income-tax withholding than normal wages are. When I see that a client has written a check from her business directly to an employee, I have to gross up that amount and add it to the employee's reported wages. That means if you write a check from your business to an employee for an even amount—say $500—when that $500 gets added to the employee's payroll records, the business is on the hook for all of the payroll tax that $500 payment would have resulted in. Usually the employee pays half of the payroll taxes and the employer pays half of payroll taxes. If you write a check from your business directly to an employee, the business now has to pay both halves of the payroll tax. And that's what we mean by grossing up. So your payroll expense for your business will be more than the check written out to the employee. Whenever you want to reward your employees with bonuses, you must run that through payroll. Talk to your payroll provider, or, if you have an accountant helping you with payroll, talk to your accountant. Make sure your bonuses run through payroll. This isn't being greedy. This isn't being miserly. This is doing things the right way. A business cannot give its employees gifts. You must run bonuses and gifts to employees through payroll. Check out the JWellsCFO Realtor's Guide to Keeping More Money at jwellscfo.com/realtors #Realtor #Business #Taxes #Accounting #RealEstate Website: https://www.jwellscfo.com Instagram: https://www.instagram.com/jwellscfo LinkedIn: https://linkedin.com/in/jwellscfo SCHEDULE YOUR FREE CONSULTATION: http://link.jwellscfo.com/consultation |
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