Depending on your business model, you may want to forecast future bonus payments to your employees. Bonuses are different than sales commissions:
- A commission is usually paid as a percentage of business an employee brings to your company. The commission is paid regularly, and varies with the amount of sales made. If you need to enter a commission, please see this article.
- A bonus is typically an irregular payment - an agreed-upon amount or percentage based on meeting a specific company goal.
There are two important assumptions to consider before setting up bonus entries in your forecast:
The employee's salary and bonus require separate entries. For each employee or group of employees who will be paid bonuses, you will need to create two entries in your forecast: one Personnel entry representing their salary, and one Expense entry representing the bonus payments.
Even if the salary is direct labor, the bonus will be an expense. Bonus payments are usually considered to be operating expenses. So, even if you are considering your employee's salary to be direct labor, we recommend using an Expense entry to represent their bonuses.
Entering the employee's salary
Please see Entering Personnel for instructions on how to create the salary entry. You can create an entry for an individual employee or a group of employees.
In the example below, we've forecast a salary for an individual employee. The monthly salary and employee-related expenses are now shown in the Personnel table:
Creating the bonus entry
In this example, we'll forecast an end-of-year bonus for this employee. LivePlan has no automated calculator for bonuses. You'll want to make manual calculations to arrive at your bonus payment amounts.
- In the Forecast tab, click the Expenses link:
- Click the Add Expense button:
- Give the entry a title, and select Other expense:
- In the lower half of this overlay, click Varying amounts over time. Then enter the bonus amounts in the months you plan to pay them. In this example, we're representing a bonus paid at the end of each year:
- Click Save & Close.
The Expenses page of your Forecast tab will now show the bonus entry:
More on personnel:
- What is the difference between direct labor and regular labor?
- Changing the Burden Rate for employee-related expenses
- Understanding head count details for personnel
- How can I represent part-time personnel in my forecast?
- Entering commission payments in your forecast
- How do I locate my salaries and wages in the Profit and Loss?