Before you begin, consult your tax advisor if you have any questions on the rates or amount to use for your company. 

You can use an easy Gross Up Calculator by ADP to calculate the gross pay or follow the steps below to calculate manually.

First, determine the net amount to be paid and taxes to be withheld for the employee:

1. Determine the net amount of the check.
2. Determine the amount of taxes to be withheld for the employee (this does not include the company's withholdings):

IMPORTANT NOTES:

• Any tax rates or amounts used are only for use in this example
• When determining which taxes to withhold for the employee, keep in mind if any tax limits have been reached, for example social security limits may have already been reached by the end of the year, so you may not want to include them in your calculation
• The net amount cannot be zero
• If you need to verify your State rates go to PR, Taxes, Activate States. To verify your Federal rates go to PR, Taxes, Maintain Tax Tables

• For table driven taxes (FWT or SWT): Determine the amount to be withheld for FWT and SWT. These are table driven, so you will need to manually determine these amounts to be withheld to use for the calculation below. Since you may not have the actual FWT/SWT taxable amount at this point, you may estimate a set amount you want to withhold for these taxes. To determine how Sage BusinessWorks calculates FWT and SWT refer to  How Federal withholding tax (FWT) and state withholding tax (SWT) are calculated
• For percentage-taxes taxes: Determine which taxes and their percent amounts for both federal and state taxes to be used to calculate the net amount of the check, such as OASDI (6.2%), Medicare (1.45%), etc. (Generally, SUI is company paid and not included in this calculation) 

Second, perform calculations to determine the new Gross Amount of the check:

 EXAMPLE: Assume the net amount should be $1000.00 and you wish to withhold social security OASDI(6.2%), Medicare (1.45%) and $200.00 for federal income tax (FWT).  NOTE: In this example, we are only including Federal taxes. Add any state tax amounts that apply for your check calculation. 

1. Total the tax percentages: Social security OASDI 6.2% + Medicare 1.45% = 7.65%.
2. Subtract the total from 100%: 100.00 - 7.65 = 92.35.
3. Convert that number to a percentage by moving the decimal two positions to the left: 0.9235.
4. Add Withholding Table amounts you manually calculated, for example $200.00 for FWT, to the net check of $1000: $200.00 + $1000.00 = $1200.00.
5. Divide the new net amount by the amount in Step 3 above: $1200.00 / .9235 = $1299.40.
6. The gross amount to be used for a net $1,000 check is $1,299.40 after withholding necessary taxes.

Last, process the bonus check using the calculations:

1. Go to PR, Processing, Time Card Entry.
2. For 'Earnings' select "Miscellaneous pay" (or if using an Other Pay select the Other Pay ID).
3. For 'Gross Pay' enter the Gross Amount of the bonus check using the calculations above, for example $1299.40.
4. Save the time card.
5. Run Automatic Payroll Calculation (Payroll, Processing, Automatic Payroll Calculation).
6. If the Payroll Register amounts do not match your manual calculations for your net check amount, you will need to go into PR, Processing, Manual Payroll Calculation to make any adjustments to your employee amounts. (Note: Amounts for FWT and SWT may need to be adjusted since these calculations are based on estimated amounts and may differ when calculated in the system.) Using our example, employee amounts for FWT amount will need to be changed to $200, and zero out amounts for SWT and any other state tax).
   • To make adjustment to the payroll calculations:
     1. Go to PR, Processing, Manual Payroll Calculations.
     2. Select the Employee ID. Click Yes to the prompt to use calculated check information.
     3. Go into Fed/State Taxes and make any necessary adjustments. Only edit employee amounts. Do not edit amounts in the Taxable pay column which may result in incorrect taxes and W-2 totals.
     4. Select OK and Save.
        
         CAUTION: After making manual payroll calculations DO NOT run the Automatic Payroll Calculation again. This will recalculate the check again overriding your manual changes. For a new Payroll Register with the changes, go to PR, Reports Payroll Register, and change the 'Reporting period' from "Current pay period" to the first option to the first option "Current Calculation"
7. Go to PR, Processing, Print Payroll Check to print your check.

How to process bonus checks