Not every payment you make to employees must be in the form of cash. You may reward them with various fringe benefits, options or stock, or other property.

While many small businesses use outside payroll companies to handle withholding on employee compensation, it's up to you as the owner to understand the tax implications of your payments to workers.

Types of noncash wages
Paying employees other than in cash or a cash equivalent (e.g., check, direct deposit) is called an in-kind payment. It may be property or services provided by your company (e.g., a company laptop for personal or home use). The amount of the payment is determined by the fair market value of the property; special tax rules may come into play for specific items (e.g., stock options, company cars).

Payments of property (typically company stock) that have strings present special issues for the company and the employee receiving the property. If there is a substantial risk of forfeiture (called "restrictions"), the property is not immediately taxable to the employee; it becomes taxable when the risk ends.