How do I incorporate bonuses in a budget?

Question

I'm preparing a budget for my firm and want to include potential staff perfomance bonuses. Do I include the amounts in the payroll expense or a separate line item in expenses?

Answer 1

Separate line item because it's not a salary which is a fixed expense.

You can say bonuses - for executives & other salaried employees, and bonuses for other staff in your details for the one line item in the consolidated budget.

Bonuses can be eliminated in times of economic downturns so that is why they are separated from owed salary expenses.

GOD bless.
MBA- Boston Univ.
CPA-retired

Answer 2

Use a separate line item which will eventually be added to payroll expense, but it will be easier to compare to actual after the period ends.