How do we pay an employee who does ‘extra’ work?

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in Office Management,Payroll Management

Question: An exempt employee will be paid to photograph the company’s annual charitable 10K run. HR would like Accounts Payable to handle it through a separate check, so no taxes would come out of the payment. This doesn’t sound right to Payroll. Who’s right?

Answer: If this employee has a side business as a photographer, then running a check through Accounts Payable could be appropriate. But HR’s reasoning—to run the check through Accounts Payable simply to avoid withholding—isn’t sound.

In general, all payments made to employees in the course of their employment are taxable and subject to withholding. You could reimburse her through Accounts Payable for any substantiated expenses, however.

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