Definition of Year End Bonus

The bonus paid to employees at year’s end is termed at Year-End Bonus. Sometimes it so happens that employees receive this bonus one year but not in the next one, which leaves them with bad feelings. Still, such bonus is assumed to boost employees’ morale if they are given at occasions as New Year, Christmas etc. There are different methods to calculate this bonus; like based on performance, salary or company’s profit.

Explanation of Year End Bonus

Some company’s give jobs with in-built-bonuses offer. They have their own criteria for calculating this bonus. A bonus could constitute a percentage of hours billed, a percentage of sales, or a percentage of the company’s profits for the year. The bonus is actually subject to many different forms of calculation, and some may be based on what the company can afford, how many years the employee has worked for a company, or on merit.

Bonus amount too is a variable. The employee serving company for longer period may get an edge of getting more bonus than the one with less time period. Same ways some companies may give out equal annual bonuses to all employees.

Limitation(s)

Though bonus is an additional pay but still is taxable as that of individual’s income. Employers may want to make sure each worker gets a certain amount of “cash in pocket” and may calculate the taxes on a bonus so an employee receives a set amount. This isn’t always the case, and since the bonus constitutes extra money received, it may be taxed at a higher bracket.