With year-end 2023 right around the corner, many businesses are giving bonuses to their employees. Below I will show you how to set-up those year-end bonuses to process them efficiently and correctly.
In the PR Pay Period Control, set up a separate Payment Sequence for the bonus checks.
Check the "Bonus" check box. This will ensure that the taxes will be calculated according to the Rate assigned on the Deduction code setup.
On the Federal Withholding deduction code, if the "Calculate as rate of gross on bonus sequence" is checked and a rate is entered in the box, this is the rate that will be used to calculate the deduction for the bonus check. If this box is not checked, the normal rate will be used.
If you have a separate Earn Code for Bonuses, be sure to assign that Earn Code to the Basis Codes tab for all appropriate Deductions and Liabilities.
It is important to process the Payment Sequences within the PR Pay Period in order. If Pay Sequence 2 for the Bonus check is processed before the regular pay checks, a limit may be reached in Pay Sequence 2. To avoid this problem, post and process the regular payroll sequence (Pay Sequence 1) before processing the bonus check sequence (Pay Sequence 2).
Note: If Pay Sequences are processed out of order, the YTD amounts on the Pay Stub will be incorrect.
As always, if you need assistance with Bonus check setup and processing, please visit our website at www.ConstrucTechConsulting.io to Book a Call with one of our consultants. To see more Tip Tuesday articles, make sure to check out our ConstrucTech page on Linkedin!
