Cash Awards
Categories: Banking, Tax, Company Management
"People work for money. If you want loyalty buy a dog," said the probably disgruntled employee. Cash rewards, AKA bonuses (or is it boni?), are a great way to incentivize employees to go above and beyond the call of duty. Make an annual sales quota, get a cash reward. It might not be an individual goal, either. Cash bonuses (boni) can get handed out as profit sharing.
All cash awards are taxable, so the amount will show up in one's paycheck. This can cut into the value of a bonus (a $1,000 bonus might become something closer to $700 after the government gets its hands on it). Some companies get around this by adding on a percentage. Instead of giving a $500 reward, for example, the company might add a 25% or 30% kicker to cover taxes, so the employee still ends up with the full $500.
Some companies try to give out actual dollar bills and not count it as employee income. However, in addition to being illegal, the company can't deduct it as a business expense. Regardless, cash awards are a good thing if you're getting one. And probably a good thing if you're the company giving one...it means it has cash, and it means something good just happened.
