Have you ever noticed how most of the main characters in holiday movies are struggling with their work/life balance?
George Bailey wrestles with hating his job. Scott Calvin struggles to spend time with his son. And Clark Griswold gets a little too hopeful about his seasonal bonus.
As an employer, you don't want to be the archetypal bad boss in a Christmas classic. Rewarding your team with gifts or bonuses boosts employee engagement and helps you create a healthy culture at work.
But it's important to consider what you can afford, what your employees want, and the tax implications.
At Patrick Accounting, we look forward to our annual Christmas party. Exchanging gifts, eating dinner, and spending time with our coworkers make it one of our favorite days of the year.
But as a small business, we know there are several factors to consider that will help save you money and benefit your team.
Read through our five tips for figuring out how you can reward your team this holiday season.
1. Do the Math
Make sure that rewarding your employees is feasible for you. If it's a difficult fiscal year and you're struggling to pay your bills, offering generous holiday bonuses is not the best idea.
Set a budget for yourself and factor in all possible expenses.
- Are you going to throw a Christmas party?
- Are you allowing your employees to bring their significant others?
- How many people are on your team?
- Are you providing dinner and drinks?
Fun festivities will get expensive quickly. It's easy to get carried away in the merriment of the season. But by sticking to your budget, you can reduce your stress and still show your employees that you care and want them to enjoy their holiday.
2. Weigh Holiday Gifts vs. Bonuses
Typically, end-of-the-year bonuses reward performance, like hitting or exceeding a sales target. These should always be consistent–they motivate your team and it benefits the entire organization.
Gifts, however, must be distributed to all employees. According to an Instantprint survey, 94% want a gift from their employer that makes them feel valued.
If it's your first year giving gifts, refrain from setting a precedent that you aren't sure you can maintain next year. Gifts worth more than $75 are taxable wages.
Buy modest gifts at first; you can gradually increase your budget as your business grows. It's better for the gifts to get larger (not smaller) with time–otherwise, you're going to have an office full of Clark Griswolds.
3. Consider Cash
Cash bonuses are not only a great reward for your team, but they help recruit talent and motivate your employees.
It may feel impersonal to hand out cash during the holidays, but you'll be hard-pressed to find an employee who doesn't appreciate it.
4. Buy Gift Cards
Gift cards are a fun way to give your employees the freedom to spend their bonuses how they want but in certain ways. Outside of a Visa or Amazon gift card, you could also consider buying vouchers for:
- Airlines
- Gas stations
- Restaurants
- Spas or hair salons
- Large retailers (like Amazon)
Remember: gift cards are taxable wages. Check out this information from the IRS on fringe benefits for the details.
At Patrick Accounting, we love to support Memphis businesses by handing out vouchers and gift certificates to local restaurants, barbershops, and retail stores. It encourages our team to interact and get to know the community better while enjoying delicious fare or a fun shopping day.
5. Give the Gift of Time
Another idea is buying tickets for your employees to basketball games, theater productions, or concerts. Several people may not normally consider buying that for themselves. It's also a way for you to figure out what your team loves to do and customize your gifts for them.
Bonus tip! As you are wrapping up the year, make sure that all fringe benefits have been accounted for, such as personal use of a company car. These can have significant tax implications and you don’t want to be caught unaware.
There are plenty of ways to keep things merry around your workplace that won’t break the bank.
Want More Tips for Supporting Your Team Year-Round?
What if you could reward your employees, grow your business, and secure your profitability—all at the same time? It’s not just a dream; it’s the foundation of the Profit First approach.
Explore our article, An Introduction to Profit First and Why It Works, to discover how this proven strategy can help you take control of your finances, prioritize what matters most, and build a business that thrives—during the holidays and beyond.
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