I am about to aquire a small convenience store/gas station business with about 20 employees. I am searching for legal, and creative ways to cut payroll costs.

My reasoning behind this is I have been told that due to social service taxes, if for example I pay an employee $8 per hour, I am actually paying him $16 an hour if I run it through payroll. So essentially for every hour I pay an employee I am paying him double.

The only things I can think of to reduce labor costs, aside from cutting back the help are..

Reward employees in gift cards such as Safeway, Fredmyer when they do something good. This would keep moral high, without constantly having to increase their wage. Is this legal? and can I reward them this amount without running it through payroll?

I was also curious as to how end of year bonus's work. Do these bonus's have to be ran through payroll? So if I give an employee an end of year bonus of $1,000, am I actually paying $2,000 out of pocket due to social service taxes ect? Or are bonus's exempt from this.

Any advice on other ideas, and the legality of these two methods would be great.