Christmas is right around the corner. Business owners are assessing their current situations. They are looking at the taxes that will be paid, cash flow needed and determining how to show appreciation for the people that help them every day. Sometimes it is easy, other times it is difficult to determine whether you give a bonus or not.
Here’s a short decision test
- Does this reflect the business values and beliefs I hold?
- Will this demonstrate the value I place on our staff?
What is the potential upside? Improve morale?
If you are considering giving a bonus – is it a performance bonus or holiday bonus? A year-end bonus is based on performance and can show a staff person what kind of job they did. While a holiday bonus ought to be a thoughtful gift that shows your gratitude and appreciation for them. Make sure that when you give a holiday or a year-end bonus, your employee knows which one they’re getting. If you choose to give both, space them out so they can’t be confused for each other, or seen as one single bonus.
Want to do something long-term consider a profit sharing contribution to the employees retirement account. Help them save for their future.
P.S. Don’t forget taxes! If you’re planning on giving out cash as a holiday bonus, monetary bonuses have to be reported on an employee’s W-2 form as taxable income. For IRS purposes gifts that exceed $25, are taxable to the recipient.
By Mary Guldan-Lindstrom, CPA