Whether it's for holidays, birthdays or just because, this article will teach you how easy it is to run a bonus payroll.
You have two options as a business owner to pay an employee a bonus:
1. Run it through payroll so you can get a tax deduction and still pay legally (recommended).
2. Give it as a gift as an owner's draw outside of payroll, which gives 0 tax benefits (not recommended).
Before you run a bonus payroll, be aware of the following default settings:
- Supplemental withholding rate of 22%.
- If you would like to apply different withholding settings, you can run an off-cycle payroll and adjust the settings during step four of the process.
- Only 401(k) deductions will apply.
- While most plans require these deductions, if you need to stop a 401(k) deduction/contribution from occurring: deactivate the benefit in the employee profile before the payroll run; you can reactivate it in their profile after the payroll has processed.
- No specified work period on the paystub.
- If your benefits are managed by Gusto, those benefit amounts that typically happen on regular payroll will not be deducted.
If you have more than one employee, you can use our search, sort, filter, and bulk edit tools to make administrating payroll(s) easier.
To run a bonus payroll, follow these steps:
- Click the Run Payroll tab.
- Click Run bonus.
- Select the check date.
- Click Advanced Settings if you are adjusting the default payroll settings for this bonus payroll.
- Next to the employee, click Enter Payment.
- Enter the bonus amount.
- Adjust the payment method to check or direct deposit if needed.
- Click Save & Continue.
- Review the wages and taxes we will be debiting.
- If you need to make adjustments, click Go Back.
- If you are ready to process, click Submit Payroll.
- If you are paying your employee via check, print the check and give it to your employee.
- You'll receive a confirmation email letting you know that your bonus payroll has processed.