How to Pay a Bonus in QuickBooks Payroll

Posted by on Aug 5, 2011 in Payroll Module | 4 comments

There may be occasions during the employees duration of employment, that the employer wants to pay a bonus for work performed, reaching a sales quota or maybe at Christmas. QuickBooks looks at a Bonus as a separate payroll item thus you have to set this up in order to pay it.

QuickBooks will also tax this Bonus, so if you want the figure to be a particular number, than you will have to calculate the tax before you pay the bonus.

To set the Bonus up you would go to the Menu Bar/Lists/Payroll Item List and create a New item called Bonus. You can direct this Bonus to your Payroll Expense account or your Direct Labour Cost of Goods account.

Accept the defaults on the ROE Tracking and click on Finish. Now to pay the Bonus.

Go to the Home page and click on the Employees tab which will take you into the Payroll Centre as displayed on the left. Next click on the Payroll tab and in the Pay Employees section click on Unscheduled Payroll.

In the Enter Payroll Information window I will check the Employee that I want to pay the Bonus to, which in this example is Lopez, Reynaldo, and then click on the Open Pay Check Detail tab.

 

I will then delete any Payroll items that appear in the Earnings section and also any in the Other Payroll Items section. I will then go back to the Earnings section and click on the drop-down box and choose Bonus, enter in the amount in the Rate field and tab.

This will open up the New Bonus Payment Detail window as shown on the left. QuickBooks is asking for a figure to be entered in the amount field, which is proceeded by the Estimated annual taxable earnings not including Bonus(es) line.

I need to enter in a figure here in order for QuickBooks to allow me to continue, so I have used 40,000 as the estimated annual taxable earnings.

To finish I would click on Save & Close, then the Create Pay Cheques tab and finish with Print Pay Cheques.

As you can see on the right, because the estimated annual taxable earnings was 40,000, QuickBooks took off tax in relation to that figure which left just over half of the 500.00 bonus.

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Due to time constraints this will only be a 30 minute segment if warranted, and only 10 participants can join in at any one time.

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4 Responses to “How to Pay a Bonus in QuickBooks Payroll”

  1. Ron Estey says:

    It seems that QB will NOT apply the standard flat CRA bonus rate of 15% for bonuses up to $5000 or any other rate that is not calculated from the normal wage ‘tables’. Is this right? If so, seems another example where an easy user friendly function is missing from the software.

    • Larry Johnson says:

      Hi Ron, you are correct, it wants tax the Bonus at the annual earnings amount. What you could do is figure out 15% of the annual earnings and use that as the figure. Let me know.

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