Re: Payroll calculations
Hi Genevieve,
Wait. I noticed what you just said. He pays himself. Is this "employee" one of the owners of the company? Second if he is, is this company organized like the equivalent of a US Corporation, or an S-Corp/LLC? This makes a huge difference in how he's paid and taxed.
If he is an owner, and this is not a corporation, then this person does not get a bonus, he gets an owner's draw, which does not have tax withholdings.
Second, bonus pay is considered to be supplemental income to regular income, so if he is only paid twice per year, it would seem to me, this would be classified as pay, not as a
"bonus".
If all else fails, I can call up my CPA friend for you.
Let me know if I can be of any more assistance to you.
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