I really enjoyed the video, you have a great way of making complex topics enjoyable to learn. Thank you for that. I'm watching the playback on UA-cam and was wondering if the slides with the links are accessible? Thank you.
Thank you so much for watching and taking the time to comment!! Here is a link to the presentation we created for that event! iam.spotycus.com/payrolltips If you have any questions or if I can be of assistance, feel free to reach out any time!! facebook.com/Spotycus
If any payment like the bonus you said never went through payroll, what should we do? My client say he will issue a 1099 but I told them that is a RED 🚩 FLAG to IRS
Hi @relaxedclub9425, I agree with you! The IRS does not like to see a W2 and a 1099 from the same company. It definitely would be a red flag in my book. That is on the "employee side". On the employer side, there are a couple concerns around doing this. 1: How were those expenses categorized? If not through payroll, were they recorded as subcontractor expenses? Do you have a W-9 for that person also? Do they know that the money will be reported and they will be responsible for the taxes due on that money? 2: This also impacts the company's workers' comp payments and may be questioned during your annual audit. If you do not have certificates of insurance for subcontractors, they can try to charge you the highest premium on those wages. *My suggested fix based on the current information:* The best way to correctly record all payments made to employees would be to run a bonus check with the amount of the check as the net amount. This means that the company will pay both the employee and employer taxes for that specific check. If this was part of the previous year payroll, you may need to contact payroll support to have them backdate a check prior to 12/31 so your W2's & quarterly reporting is accurate. Another option If you have already finalized payroll for the year would be to code the bonus payment as a loan to the employee when it was originally recorded. Then during the new year, create a paycheck for them as a bonus but reduce the total net check by the amount of the loan so that it becomes a zero dollar paycheck. This would record the expense in the current year and not impact the prior year payroll. Keep in mind, when you change that to a loan to employee, it will not be an expense on your books so the total profit of the company will increase for that year. *Option 2:* Most business owners do not like this option. If it is not going to be run under payroll, you can record the payments as an owner draw or distribution since it would not be a qualified business expense. I do not like doing this either. Sorry for the really long answer, but I hope it helped!!
Thank you for watching and commenting! I just uploaded a copy of the PDF to a shared google drive for you. pxlme.me/pay23pdf Let me know if you have any challenges accessing it!
I really enjoyed the video, you have a great way of making complex topics enjoyable to learn. Thank you for that. I'm watching the playback on UA-cam and was wondering if the slides with the links are accessible? Thank you.
Thank you so much for watching and taking the time to comment!! Here is a link to the presentation we created for that event! iam.spotycus.com/payrolltips
If you have any questions or if I can be of assistance, feel free to reach out any time!! facebook.com/Spotycus
If any payment like the bonus you said never went through payroll, what should we do?
My client say he will issue a 1099 but I told them that is a RED 🚩 FLAG to IRS
Hi @relaxedclub9425,
I agree with you! The IRS does not like to see a W2 and a 1099 from the same company. It definitely would be a red flag in my book. That is on the "employee side". On the employer side, there are a couple concerns around doing this.
1: How were those expenses categorized? If not through payroll, were they recorded as subcontractor expenses? Do you have a W-9 for that person also? Do they know that the money will be reported and they will be responsible for the taxes due on that money?
2: This also impacts the company's workers' comp payments and may be questioned during your annual audit. If you do not have certificates of insurance for subcontractors, they can try to charge you the highest premium on those wages.
*My suggested fix based on the current information:*
The best way to correctly record all payments made to employees would be to run a bonus check with the amount of the check as the net amount. This means that the company will pay both the employee and employer taxes for that specific check.
If this was part of the previous year payroll, you may need to contact payroll support to have them backdate a check prior to 12/31 so your W2's & quarterly reporting is accurate.
Another option If you have already finalized payroll for the year would be to code the bonus payment as a loan to the employee when it was originally recorded. Then during the new year, create a paycheck for them as a bonus but reduce the total net check by the amount of the loan so that it becomes a zero dollar paycheck. This would record the expense in the current year and not impact the prior year payroll. Keep in mind, when you change that to a loan to employee, it will not be an expense on your books so the total profit of the company will increase for that year.
*Option 2:*
Most business owners do not like this option. If it is not going to be run under payroll, you can record the payments as an owner draw or distribution since it would not be a qualified business expense. I do not like doing this either.
Sorry for the really long answer, but I hope it helped!!
@@Parkwayinc these helps. But unfortunately, they want it to be coded as contractor not employee. I will do that
This was amazing…..thank you! How do we get the the PDF?
Thank you for watching and commenting! I just uploaded a copy of the PDF to a shared google drive for you.
pxlme.me/pay23pdf
Let me know if you have any challenges accessing it!
Thank you@@Parkwayinc