business owner handing employee a year-end bonus check

5 Steps to Giving Out Year-End Bonuses

Your employees have a lot to look forward to at the end of the year – holiday parties, gift exchanges, and a few days off work. Give them one more thing to look forward to by giving out year-end bonuses.

There’s a lot that goes into writing bonus checks at the end of the year, so follow these 5 steps to make it easier:

1. Decide Who’s Going to Help You

There are a lot of decisions that go into giving out bonuses, including who gets them and how much each bonus will be. It’s a lot to undertake yourself, so figure out who is going to help you with those decisions. You might ask your HR specialist, payroll specialist, or managers.

2. Decide Who is Receiving a Bonus

After you’ve determined who will help you make bonus-related decisions, decide who is going to be receiving a bonus. You might choose to give out bonuses to everyone on your small business team or just to your top performers.

3. Determine the Goal of the Bonuses

Next, determine why you’re giving bonuses this year. There are several reasons you might give year-end bonuses:

  • to boost morale and employee retention,
  • to thank your employees for all their hard work throughout the year, or
  • to boost end-of-the-year productivity.

4.     Determine Bonus Amounts

Once you know your why, it will be easier to determine how much you’re going to give. Of course, this will also be affected by your budget.

There are four types of bonuses:

Same Amount Per Person

If you’re giving bonuses to boost morale, then consider giving each employee the same amount.

If your employees are salaried, you could give each employee a percentage of their annual salary, instead of a set amount. For example, you could give everyone 1% of their salary.


If you want to thank your employees for their hard work throughout the year, consider performance-based bonuses.

You can give bonuses to employees who met their goals and bigger bonuses to employees who exceeded their goals. You can look past their goals and consider other achievements, too, like getting licensed or certified.

Profit Sharing

Productivity often dips at the end of the year, so if you want to boost end-of-the-year productivity, consider sharing your profits with your employees. This encourages your employees to think about your company’s goals and work hard at the end of the year.

For example, if you expect to make $100,000, tell your employees that 10% of anything over $100,000 will be split equally among them.


If you want to give your employees something extra at the end of the year but don’t have the budget to write bonus checks, consider non-monetary bonuses. You might be able to give all your employees an extra vacation day or treat everyone to a catered lunch.

5.     Hand Out Bonus Checks

Once you’ve decided how much to give your employees for a year-end bonus, it’s time to write those checks.

If you write them by hand, don’t forget to track the payments and add them to your payroll tax forms. Or, you can use Workful to write your bonus checks, so your employees can have them faster, making the holidays a little more special and easier for you.