Payroll calculations

[VA Simple Services]

I'm trying to calculate deductions and taxes for bonus payments to employees. Anybody familiar with calculations, website or software to use? I live in Montreal (Quebec) and we use different numbers than the rest of Canada. I use Simply accounting but I don't have the payroll services that Sage offer. Any easy way of doing this?

[Office Goddess]

Give this one a shot to see if it will work for your needs.

[VA Simple Services]

Thank you very much. I have another question regarding pay periods. The employee in question doesn't receive actual periodic pays. He pays himself one or two bonuses per year so what pay period do I use since it's not an option? Do I put simply as pays or bonus? his accountant (he's not very reliable) usually does this but I would like to figure it out myself.

[Tomekia Lloyd]

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.

[VA Simple Services]

Tomekia,

It's for the owner of the corporation. But the company is paying him a bonus like an employee. I guess I won't have a choice to corner the accountant and pull the answers out of his nose! It's such a pain to try to get anything out of him!

[Sharon Clark]

If he is eligible for an owners draw (depending on the type of business, incorporated etc) it would be wiser to take an owners draw than a bonus because an owners draw is not taxed where a bonus is.

There is a payroll calculator on Revenue Canada's website which is specific to each province and tax tables are updated frequently so you are always using the correct calculation.

After you talk to the accountant let us know what his feedback is and how he has been handling the situation.

Have a great day!

[Tomekia Lloyd]

Okay, so this is a corporation. Therefore, he does have pay like an employee and he does have withholdings. Now, the thing is bonuses are taxes at a higher rate than pay. At least in the US, they are. So it seems that I would elect to do it as pay, not as a bonus, since he gets no other pay for the year.