In case you wonder, what are the tax differences between a ‘bonus’ and a ‘commission’? – Get to know it here , reading the guide we have prepared about it. Keep in mind that all this is related to the differences between ‘direct wages’ and ‘indirect wages’ , but focused on other types of work incentives.
Commissions and bonuses
Bonuses and commissions often create doubts among entrepreneurs and new entrepreneurs, in fact, many people believe that they are the same. In any case, the reality is different, as commissions differ greatly from bonuses (at least in most circumstances). Therefore, if you have any doubts, read the definition of each of these terms carefully.
Commission
Commissions are payments made by companies for services or work rendered. It is important to bear in mind that payments for work carried out by cooperatives or contractors are also considered commissions.
Usually these types of payments are made according to the amount of sales made by an employee. That is, commission-based jobs are more fruitful with higher volumes of work .
It should be noted that there are variants in relation to commissions, in fact, some companies offer jobs with base salaries and with special commissions. These commissions usually represent a set percentage. This type of commission is common for sales workers.
For example, suppose that the manager of a business applies a percentage of commission with each sale that the workers make. If this commission is set at 5%, this means that, for each sale made, the worker will obtain a commission , but clearly to carry this type of system, it is necessary to know the importance of balance sheets in a business , properly managing expenses and payments.
Bonds
Companies provide these types of payments as rewards to employees for outstanding performance. Bonuses are usually unrelated to salaries and are not always stipulated in the regulations or legality . This payment is born from the will of the owners or managers of the employees, being part of the types of work incentive plans .
Undoubtedly, bonuses are often incentives that help establish an atmosphere of well-being for employees. In fact, a good bonus often increases employee performance, as employees feel that their work has special value and is appreciated.
There are many variants of bonds, in fact, although many are monetary, others are usually presented as gifts or objects. In fact, some companies have traditions where they give gifts to their employees after years of service.
There is also talk of productivity bonuses , which represent incentives that are usually paid when reaching a certain amount of sales or objectives. These types of bonuses are offered to workers upon reaching goals and are effectively awarded as prizes.
Tax differences between ‘bonuses’ and ‘commissions’
Every good manager who knows the main objectives in the management of human resources , knows that the most important difference at the fiscal level between a bonus and a commission is that the commissions, when they are paid, go directly through the fiscal processes. In other words, companies take into account the various taxes established by law when paying commissions.
On the other hand, bonuses, when they are born properly by the will of the employers, should not go through this process. Of course, there are exceptions, because sometimes “fixed bonds” enter the various balances that a company maintains and therefore also fall in the payments of taxes or fiscal duties of these characteristics.
