Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Biz Owners-Use careful planning when calculating bonuses in the #PerformanceBasedPay system

Name: Painting Biz Owners-Use careful planning when calculating bonuses in the #PerformanceBasedPay system
Uploaded: 2023-09-05T13:15:00+00:00
Duration: 39 s
Channel: Daniel Honan
Description: Painting business owners should tie bonuses to crews beating budgeted labor hours. Set the bonus percentage carefully, accounting for payroll taxes and…

5 Sept 2023 · 1 min

Watch on YouTube

0:39

Painting business owners should tie bonuses to crews beating budgeted labor hours. Set the bonus percentage carefully, accounting for payroll taxes and admin costs, so the company keeps enough of the savings to protect profit margins while still rewarding employees fairly.

Chapters

performance pay system, expectation is that you beat the budget hours in order to be eligible for the bonus. You have to identify what is the structure of the bonus. Is it going to be 50% of the labor saved? 30%? 70%? What is that going to look like? Are there any stipulations, right?
And don't forget the increased payroll taxes. That's another cost involved too, which would factor in along with the admin cost when you're deciding either it should be closer to the 30% range or closer to the 70% range. Definitely want to treat your guys as well as you can, but I appreciate, Daniel, you, you making the point that this is not cost-free to the company. And so you don't want to be losing money. That's why you need to hold back some of that labor savings for yourself to cover these costs and also to make your profit margins as well.