Analyze the company's financial statements for the year. Reference the margins with the expected profits for the year. This enables you to determine if the company will give bonuses in that year. For example, if the profits exceed the targets by a particular percentage, it may warrant that the top level management gets bonuses at a particular rate.
Create a bonus accrual account credited by the above-target profits. Close it by debiting the amount to the relevant department or group eligible for the bonus. This is done to make sure that there is transparency in the books of accounts. It keeps the accounts balanced and shows the money trail to the relevant department.
Open a bonus accrual liability account. Here you factor in all liabilities that may surface as a result of payment of bonuses. These may include liabilities such as social securities withholding tax, federal withholding tax and medical care withholding tax. Credit the account with these amounts and the tax paid to the individuals getting the bonus.
Debit the employee salary account with amount transferred from the accrued liability account. Clearly illustrate the bonus amount and the tax payments paid as a result of it. This will ensure there is a clear trace of how the amount has trickled down to the employee. It builds an image of transparency for the company.
Give the employee the bonus check or transfer the amount to her account, depending on the company policy.