How to create a payroll bonus check or line item
If you would like to create a separate Bonus Check and/or identify the amount as a Bonus amount on the Employee's Check Stub, you will need to complete the following:
- Print the employee information
- Determine which expense account to use or add an expense account to your chart
- Add the bonus pay item in setup
- Define the distribution accounts for the Gross Pay Account affiliated with the Bonus Expense
- Tax Considerations
- How to print a paper check when the employee usually gets paid electronically
- Add the bonus pay item to the employee time card during the payroll process
- Reset any employee changes after the payroll process is closed
- Entering the net check amount and computing the gross
Print the employee information
Since this process involves making changes to the record of each employee who will be receiving a bonus check, we recommend printing an Employee Record before moving forward.
From ParishSOFT Payroll, click Reports → Employee → Employee Record → select the Bonus Employees and print the report. Store these reports since you may need to refer back to them after this process.
Determine the Expense Account you will use with Bonus Checks. It could be the same as you use for normal payroll, or you may choose to add a new account. See the following Help File Articles to learn how to add new accounts:
If you would like to identify a specific gross pay expense account for all bonuses, while in Setup → Pay Items → Bonus → Default Gross Pay Account, select the expense account from the list and click Submit.
Add the Bonus Pay Item: Click here to learn how in detail
Click Setup → Pay Items and create a Pay Item called Bonus. Set the Pay Item Type to Taxable and enter the Default Check Sequence of 1.
Define Account Distributions
If you haven't already, you must define the distribution accounts for the Gross Pay Account affiliated with the Bonus Expense. Click Setup → Account Distributions → select the gross pay expense account Bonus from the Quick Find and enter the appropriate Liability accounts for the Deductions and the appropriate Expense and Liability accounts for the Benefits, then click Submit. Note: If you already have one Gross Pay Account set up with the appropriate distributions that will match this new account, you may simply click the Copy button and when prompted, select the account which is already set up. This will fill in all of the appropriate distribution accounts.
You will need to calculate the correct taxes on the Bonus Check. Bonus Checks are considered Supplemental Wages and can be taxed at a higher rate. You may be interested in the IRS Requirements on taxing Supplemental Wages. You may also wish to consult with an accountant.
Regardless of the method you use to withhold income tax on supplemental wages, they are subject to social security, Medicare, and FUTA taxes.
The following may only be done when you are running a separate Payroll Process for Bonus Checks. Once you have compiled your figures, if the Bonus tax rate is different than usual for any employee, go to Employees and select an employee who will receive a Bonus Paycheck.
- Click the Tax Data Tab.
- Click the Override field for Federal and State and enter the amount of taxes to be withheld from the Employee's Bonus Check and click Submit.
Note: If you do not want the Deductions and Benefits to be calculated on the Employee's Bonus Check, you will be able to deselect them later in the Payroll Process Calculate Step.
To deselect (if you do not want to include Benefits and Deductions on this Bonus check) when you get to the Calculate Step, click the Calculate Options button.
A screen with all the Benefits and Deductions will display. Unmark all optional Benefits or Deductions you want to omit and click submit. Now click Calculate Payroll and complete the payroll process. For more information, see our help file article, How to exclude certain deductions or benefits from one payroll process
This setting will reset back automatically after you complete this payroll process.
When the payroll is closed, if you updated the Tax overrides for any employee, go back to the Employee's record and reverse this:
- Click the Tax Data Tab.
- Click into the Override field for Federal and State and remove the amount or revert it to its original amount (see Employee Record reports you initially printed) and click Submit.
How to print a paper check for ACH employees
If you want to print checks for employees who normally use Direct Deposit you will need to change this designation prior to calculating your Bonus Checks Payroll Process.
Read the following article to learn how to change the designation from ACH to a paper check.
Once complete, click Payroll Process and create a new Payroll Process with the date of the Bonus Check and the appropriate Bank Account; click Submit.
How to add the bonus pay item to the employee time card during the payroll process
Select the Employees who will be receiving a Bonus Check and click Submit.
- If you are creating a separate check for the Bonus and not including the employee's Regular Pay, remove the regular pay items from each Timecard by clicking the red X on the left.
- Add the Bonus Check Pay Item and enter 1 in the Hours/Units field and the gross amount of the Employee's Bonus Check in the Rate field. Click Submit.
Repeat this process for each employee receiving a Bonus Check.
Before continuing to process the payroll, you may want to see the section on tax considerations.
Reset any changes made after the payroll is closed
Once you have closed this bonus payroll, make sure you reset any changes you made, back to the original settings.
- If you changed or added the employee tax override, make sure you change it back or clear it. (Employees → Tax Data)
- If you changed the employee from ACH (direct deposit) to a paper check, set it back to ACH. (Employees → Direct Deposit)
- If you added a permanent new pay item for the bonus to the employee record, make sure the Pay Amount is set to zero. The instructions in this article did not walk you through adding a permanent new pay item, but if you did, you will want to make sure the default amount is set to 0.00 so in future paychecks, it does not add the bonus.
Entering Net Paycheck Amount to Determine the Gross
While ParishSOFT Accounting does not have a feature that calculates the Gross Pay Amount based on a Net Pay Bonus Amount entry, a quick web search will return several options to do so.
If there is an amount in the Extra field it will need to be removed. You will need to remember the amount you removed so you can enter it back in (and remove the override amount) after the Payroll Process is complete.