Business By The Books with Danielle Hayden The Ultimate Guide to Giving Team Bonuses That Make Financial Sense – Ep 195
It's that time of year again! In this episode, host and CEO of Kickstart Accounting, Inc., Danielle Hayden, dives into the topic on every business owner's mind toward the end of the year—bonuses—a perfect way to celebrate and reward your team's hard work! With Danielle's easy 4-step framework, she'll walk you through how to structure bonuses thoughtfully, so you can show appreciation while keeping your business financially strong. Get ready to learn practical, step-by-step strategies that will help make rewarding your team a stress-free, financially savvy experience!
Key Takeaways:-
Determine Profitability: Only consider bonuses if your business is profitable, verified by examining the year-to-date net income.
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Check Cash Reserves: Ensure that sufficient cash is available to avoid cash flow issues. Ideally, set aside funds throughout the year to prepare for bonuses.
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Allocate a Bonus Pool: Danielle recommends distributing 10% of net income as a guideline, though this depends on your business's performance and goals.
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Identify Eligible Employees: Assess eligibility by listing all employees and evaluating their tenure, alignment with company values, and overall performance over the year. She suggests categorizing performance levels (exceptional, meets expectations, or below expectations) to ensure fair distribution.
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Plan the Timing: Choose when to pay bonuses based on tax strategy. Paying before year-end counts toward this year's expenses, while paying afterward counts toward next year.
Introduction to Team Bonuses and Financial Stability (00:00:00 - 00:00:51)
Framework Overview for Bonus Distribution (00:00:51 - 00:01:25)
Step 1: Determine Year-to-Date Net Income (00:01:25 - 00:02:45)
Step 2: Check Cash Balance (00:02:45 - 00:03:27)
Step 3: Decide Bonus Pool Amount (00:03:27 - 00:04:09)
Step 4: Identify Eligible Employees (00:04:09 - 00:06:28)
Step 5: Importance of Timing for Tax Purposes (00:07:30 - 00:08:47)
Summary of Bonus Distribution Framework (00:08:47 - 00:09:55)
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