When Josh, Eddie, and I started Gusto, we spent many hours interviewing small business owners, accountants, and bookkeepers. We wanted to truly understand their pain points and challenges before building our product.

Today I want to share the story of Jane*, CEO of a Mountain View startup company with 12 employees.

Jane’s team had just completed a two-week sprint to achieve an ambitious milestone. They put in long hours during the week and on weekends, pushing each other to do their best work. Jane was proud of her team and pleased with the results, so she wanted to show her deep gratitude for their dedication.

The next morning, all her employees found envelopes waiting for them on their desks. Each envelope contained a personal thank-you note from Jane and a $100 bill. Everyone was pleasantly surprised and appreciative.

The company’s accountant, however, had quite the opposite reaction. 

“You did what?!” she exclaimed to Jane on the phone. “You can’t just give people cash and run payroll afterward. It doesn’t work that way!”

She explained that in payroll, you have to input gross amounts, not net amounts. Then each employee gets a different net bonus amount added to their next pay stub, depending on their tax withholding and personal status.

Disappointed, Jane had to pay several hundred dollars to her accountant and payroll company to fix the mess the $100 net bonuses had created. The fix involved using a special gross-up calculator that took hours to operate. Jane later told us the she would never do this again.

Jane and millions of others of small business owners are held back by their legacy payroll systems because they can’t easily reward employees. Rather than immediately acknowledging hard work, commitment, and accomplishments, they have to wait until the end of the year to dole out bonuses.

We strongly believe the most effective bonuses are awarded on the spot, and with an exact net amount.

After our conversation with Jane, the three of us felt more energized than ever about embarking on our journey. We set out to rebuild payroll from the ground up, with the modern business in mind. Meanwhile, I wrote in my little green notebook: “Important: ability to give net bonuses to employees, on the spot.”

Today I’m thrilled to share that our team just released “Spot Net Bonuses,” a more effective and meaningful way for people to reward their employees.

Now you can input a net bonus amount you want to give your employees, enter them in Gusto, and…that’s it! Payments can be made in cash, by check, or direct deposit, and we’ll handle all tax calculations and filings behind the scenes.

Bonuses are a fantastic way for managers to motivate their employees and they shouldn’t be something that only corporations with big HR and payroll departments can offer. With our new feature, small businesses can finally give net amounts to employees at any time, and for any number of good reasons, such as:

  • Celebrating an anniversary with the company
  • Providing exceptional customer support or meeting a sales goal
  • Team achievements or individual milestones

At Gusto our mission is to empower business owners to connect more meaningfully with their people, and to motivate individuals to do their best work.

Thanks for the inspiration, Jane! This one’s for you.

Business owners and employees, we’d love to hear what you think of Gusto’s new spot bonus feature. Please send your stories to [email protected].

*Though she is a real person, Jane is not her actual name.

Tomer London Tomer is the co-founder and Chief Product Officer of Gusto. He is responsible for the development and execution of the product vision — reimagining how modern payroll, benefits, and compliance should operate.
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