How to handle bonuses and commissions in payroll?

Properly managing bonuses and commissions in payroll ensures fair compensation and maintains compliance with tax regulations.

  1. Define the criteria for bonuses and commissions within your payroll policies.
  2. Set up payroll system entries to handle bonus and commission payments, ensuring they are categorized correctly for tax purposes.
  3. Calculate the correct amounts for each employee based on their performance or sales data.
  4. Include bonuses and commissions in the payroll cycle in which they were earned.
  5. Keep accurate records of all bonus and commission payments for auditing and reporting purposes.