It’s time for the holidays, and along with lighting candles and decorating trees, drinking mulled cider and champagne, it’s time for the Year End Bonus, something anticipated by every employee.
As a business owner, first decide why you’re giving the bonus. That will determine the timing of the bonus, and how you calculate the amount that you’re giving.
The bonus can be a uniform holiday gift, a reward for the company’s performance in the prior year, or a reward for the work each employee did. Whatever you do, each employee will remember exactly what you gave them last year.
When will you pay this? If it’s a holiday present, you want to make sure that you pay it before the holidays, so that your employees can use the money to buy holiday presents. Performance bonuses should also be paid before year end. If it’s based on company performance, the IRS requires that bonuses be paid before the middle of March, if it’s going to be an expense of the prior year.
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