Bonus Question and Answer

The month of December often includes paying out year-end bonuses. In the Pamiris system, this can be accomplished when running a Regular Payroll, by processing checks in-house and running a Manual Payroll, or by requesting a Custom Payroll be built.

In order to avoid confusion when the time comes, here is an FAQ on entering bonuses using the Pamiris sytem.

Q: What is Grossed-up vs. Not Grossed-up?

A: A Grossed-up Bonus means that the employer will cover all the Federal taxes, state withholding is excluded. As an example, an employer intends to pay an employee a $100 bonus. The employer, having selected Gross-up pays the amount of the bonus, ($100) plus all associated taxes ($100/.6935 in 2012). As a result, the employee will actually receive a bonus amount of close to $144.20. Any other taxes (state unemployement, state income, etc.), are assessed as usual.


Grossing up bonuses can be very costly to the employer but you have to think of it not as a $100 bonus but as a $144.20 bonus if you want the employee to receive a full $100 net bonus.

For a Not Grossed-up bonus, the employer pays the gross amount of the bonus ($100), but after associated taxes are taken out ($100 * tax % from employee W-4) the employee receives a net bonus amount that will vary, depending on their tax rate.

Q: How does Pamiris calculate the Grossed-up amount on a bonus?

A: Gross = Net/1 – (FIT rate + SS rate + Eme Med rate)

Q: What is discretionary vs non-discretionary?

A: A discretionary bonus is one given at the sole discretion of the employer, it is not an amount that has been promised to the employees. A non-discretionary bonus is given after the employer determines what standards are required to receive a bonus and an employee expects to receive that bonus if they have met those standards.

Q: How do I enter a bonus in the Pamiris system?

A: Log into the Pamiris system

  1. Go to Payroll.
  2. Go to Bonuses/Commissions .
  3. Choose an employee from the drop-down menu.Year End Bonus-Commissions
  4. Click Add.
  5. Choose an Effective Date from the drop-down calendar at the top of the page. (Effective Date needs to fall within pay period that you want to pay out funds).
  6. Enter amount of Bonus.
  7. Enter Description.
  8. Select type of Bonus (one button in each column must be marked before you can proceed).
  9. Click Save.
  10. View page with complete list of bonuses for every employee.
  11. Bonuses are not viewable on Bonuses/Commissions page once they are run in a payroll. They are viewable on paystubs and payroll reports.Add Bonuses
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Taking the Plunge: Deciding to Outsource Payroll

Stack of paperwork

If your desk is starting to look like this, it may be time to outsource your payroll to an online service provider.

Whether you’ve just made your first hire, or your company headquarters is already packed with productive employees, you can enjoy the increased time, money, and peace of mind knowing that your payroll is in competent hands. Outsourcing payrollallows you to focus on the key functions of your business, and leave tedious details in the hands of a professional. Unsure how to go about outsourcing your payroll to an appropriate provider? Keep reading.Step 1: Define your business objectives. Discuss the following questions with your executive team, and be very precise with your answers.

  • What processes are you considering turning over to an outsourced payroll service provider?
    Bad answer: “We want to outsource our payroll process.”
    Good answer: “We want to outsource our payroll process, including payroll-related tax calculations, withholdings and deposits, to an online-based provider who offers electronic reports, mobile payroll services, and direct deposit payment options.”
  • What do you hope to achieve by outsourcing these processes?
    Bad answer example: “We hope to see an overall increase in productivity.”
    Good answer example: “We hope that by eliminating payroll as a technical concern, that our office administration team will have more time to commit to crucial projects X, Y, and Z.” or “by outsourcing payroll our HR personnel will have the ability to focus on X,Y,Z”
  • What results are you expecting from outsourcing these processes?
    Bad answer example: “Easy pay periods.”
    Good answer: “As a small company with an uncomplicated payroll, we expect to spend a maximum of 2 hours per pay period double-checking our information before handing the process over to our payroll service provider. At that point, we expect to be removed from the equation beyond the occasional phone call.”Remember: if you skip this step and enter into an agreement without fixed expectations, there’s a good chance both you and the company you’ve hired will become frustrated with the business relationship.
Step 2:Do your homework. Talk to a few businesses that look similar to yours on paper about outsourced payroll service providers they use. Then, talk to a few businesses that look similar to how you want your business to look on paper about which companies they outsource to. Narrow your choices down to two or three companies.Step 3: Meet with prospective outsourced service providers, questions ready. You may want to inquire about how these service providers have dealt with payroll issues similar to ones your company faces. At your meeting, be clear and upfront about the objectives and expectations you defined in Step 1.

Step 4: Weigh the pros and cons. While you want to be sure to crunch numbers and get the most bang for your buck, there are equally important factors to consider that aren’t as easily quantified:

  • Competence- Is their work punctual and accurate?
  • Scalability- Can their infrastructure adequately accommodate client growth?
  • Ease of Use- Does using their services give you a headache? Is their system well designed, properly labeled, and user friendly?
  • Flexibility- Are their representatives willing to work with any unique situations? Is their system able to expand to accommodate extra features?
  • Relationship- Are you treated like your business and time is valuable? How long do you have wait on the phone before speaking to a client representative?

Step 5: Pick a winner. You’ve done your homework, met with providers, and weighed the merits of each. You’re ready to make an informed decision. Choosing an outsourced payroll service provider should be the beginning of the end to accounting-related headaches and tedious work-arounds. It’s time to enjoy your freedom, and focus on what you do best- running your business.

This article is inspired numerous Quora questions concerning the “best” payroll provder for their company. We hope that this was helpful in addressing the misconception that there is one “best” outsourced payroll provider for any company. Was this article helpful in addressing these concerns? Is there other information you’d like to see addressed in future blog posts? Let us know in the comments.

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