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Recording employee incentive payment?

In order to sell items we wanted to move out of inventory, we did a special game for those certain items. If an employee sells a specified item, they get a special (1-time) cash payment. How would these be recorded in QBO to account for the cash going out? Need to create a special account? I hate doing that since this is the first time we've done it and may not again.

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Best answer 12-18-2018

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Moderator

Re: Recording employee incentive payment?

Greetings, SCrawford.

You came to the right place for help with QuickBooks. Let's get this incentive payment recorded.

 

In order to record this type of payment, as an initial step, you'll need to create a Bonus pay type to the employee's profile. However, if you already created the bonus pay type, you can record the payment as a manual check and not as a direct deposit.

 

Here's how to add the Bonus pay type:

  1. Select the Employees tab.
  2. Select the employee's name.
  3. In the Pay section, select Edit.
  4. In the Show all pay types section, select Bonus, then OK.

For detailed information, check out this recommended article: Pay employees a bonus paycheck in Online Payroll.

 

If you'd like to go through this over the phone, feel free to call our dedicated team who will be happy to assist you. Our contact details can be found here along with our opening hours.

 

Keep us posted if you need anything else. Have a great rest of your day.

Established Community Backer ***

Re: Recording employee incentive payment?

You need to pay it out as Taxable; you handed out Cash, bypassing all tax requirements.

 

The Bonus is Gross, taxed, and then the Net would be the takehome, but you already handed out money. That means you have to decide if the employer is covering the additional taxes, as Gross Up the bonus, or not. If so, that is further Taxable Bonus to the staff.

 

Example:

 

Bonus paycheck, written against your Cash Bank in QB, and the Bonus is increased so that this ends with the Takehome cash as the Net Pay. That means the employer is covering taxes owed that were overlooked by increasing the Bonus.

 

Or, the Paycheck needs a Net Pay Addition that is the lending from the employer to cover the employee share of taxes, so that the Bonus amount is only what you handed out. The next regular paycheck needs the net pay deduction, to show the employee repaid the employer the tax loan.

2 Comments
Moderator

Re: Recording employee incentive payment?

Greetings, SCrawford.

You came to the right place for help with QuickBooks. Let's get this incentive payment recorded.

 

In order to record this type of payment, as an initial step, you'll need to create a Bonus pay type to the employee's profile. However, if you already created the bonus pay type, you can record the payment as a manual check and not as a direct deposit.

 

Here's how to add the Bonus pay type:

  1. Select the Employees tab.
  2. Select the employee's name.
  3. In the Pay section, select Edit.
  4. In the Show all pay types section, select Bonus, then OK.

For detailed information, check out this recommended article: Pay employees a bonus paycheck in Online Payroll.

 

If you'd like to go through this over the phone, feel free to call our dedicated team who will be happy to assist you. Our contact details can be found here along with our opening hours.

 

Keep us posted if you need anything else. Have a great rest of your day.

Established Community Backer ***

Re: Recording employee incentive payment?

You need to pay it out as Taxable; you handed out Cash, bypassing all tax requirements.

 

The Bonus is Gross, taxed, and then the Net would be the takehome, but you already handed out money. That means you have to decide if the employer is covering the additional taxes, as Gross Up the bonus, or not. If so, that is further Taxable Bonus to the staff.

 

Example:

 

Bonus paycheck, written against your Cash Bank in QB, and the Bonus is increased so that this ends with the Takehome cash as the Net Pay. That means the employer is covering taxes owed that were overlooked by increasing the Bonus.

 

Or, the Paycheck needs a Net Pay Addition that is the lending from the employer to cover the employee share of taxes, so that the Bonus amount is only what you handed out. The next regular paycheck needs the net pay deduction, to show the employee repaid the employer the tax loan.

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