Owning a business can be hard.. we all have those employees that make every hard day just a little bit easier! Put on your Santa hat– Saint Nick won’t be the only one delivering presents this year!
Are you planning to spread some holiday cheer among your employees by giving a Christmas bonus? Running a bonus in Gusto is super easy. Here are some key things to know to make sure you stay compliant and make your employees happy!
First, go to Payroll on your Admin menu and select Run Payroll. Next, scroll down to “Other payroll options” and select Bonus Payroll. You will enter a work period, which is the timeframe that the employee worked to earn this payment. Next, select the check date. This is the date that you want your employees to be paid this bonus. Then, you will want to block all deductions and contributions. Important: Gusto is unable to turn off 401(k) deductions and contributions due to the requirements of most plans. Next, you will need to review the tax withholding rates. You will need to select Edit rates under the Tax withholding rates section. If the bonuses are under $10k, you will choose use rate for regular wages. If it’s over $10k, you will select use supplemental rate, as this will tax them at the appropriate tax bracket. Next to the employee, click Enter Payment and choose either Gross Earnings or Net Earnings. For example, if you want “Joe” to take home $200, you will choose the net earnings so Gusto will gross up the amount to account for taxes. If you want Joe to receive $200 with taxes applied, you will enter in gross earnings. Be sure that the payment method is correct as a check or direct deposit. You’re almost done! Click Save & Continue to review your bonus payroll. Important: If your employee has an active garnishment, you may need to check with the garnishment authority to see if there are specific requirements for garnishing the bonus payment. If everything looks good, click Submit Payroll. This will sure put a smile on your employees faces!
If you have any questions about Gusto, or any other payroll-related matters, remember… we are always only a phone call away and our payroll team will be happy to help!
Have a great holiday season!