Does Turbo Tax Pro 2016 allow calculations for special situations ?

[Amit2]

In Wave Accounting, we cannot do only bonus payouts to the owner. E.g If I have never taken a salary and neither an owners draw and only want to take a bonus at the end of the year and file it on my T4, Wave Accounting will not let you do that. You have to mandatorily enter a salary and then one can enter a bonus. Basis this, I am planning to shift to Quickbooks Pro with Payroll. I wanted to check prior shifting that Quickbooks allows me to do the following :

a) Manage Owners Draw and offset with a bonus by the end of the year and pay all the deductions. 

b) Allow me to only process bonus instead of Salary. 

Many thanks for your assistance. 

[Delphision · Accepted solution]

A word to the tax ramifications:

Ideally speaking, you should be issuing yourself a T5 to clear your shareholder draws which would be reported on your personal income tax.  This is the most common approach and the least likely to raise eyebrows at CRA.  Another method is to report management fees to the shareholder, which is also common, but slightly less popular at CRA.  This would go on your personal income tax as self-employment income.  CRA is much more likely to look at a bonus paid at year end.

[Amit2]

I am now at my year end and just paid myself a bonus with no salary paid throughout the year. Will this be a problem as I was told that this is a process many owners follow.

[Delphision]

When you issue yourself a T4, meaning that you are an employee of the company, they expect to receive regular payroll source deductions, rather than one lump sum.  They will consider that you are a) not sending in applicable source deductions on a monthly basis which is the least number of pay periods available, or b) just paying yourself arbitrarily an amount intended to reduce any corporate tax to nil.  Both scenarios irritate CRA.  You would need to send in several nil payroll returns and then one large one, assuming that you have asked CRA to open a payroll account.  They don't do that automatically.  Since this is your first year, and since filing a T5 is little different from filing a T4, I would recommend that approach.  I also suggest that you take time to talk to an accountant about your corporate filing requirements.  It will save you much grief.  When software refuses to do what you want, there may be a good reason for it.

[Amit2]

Thank you and well noted. As this was the first year and revenues were very low, I just took off bare minimum to cover my yearly expenses and have already paid myself at the end of the year. My revenue also started rolling in Q3 of this year so there was nothing that could be paid out.

I opened a payroll account only in this quarter. I just wanted to ask, are you an accountant and how can I contact you as you seem pretty knowledgable.

[Delphision]

I work in an accounting office and process a number of corporate year ends per year.  You will find people just like me at a local accountant's office.  This forum is not sufficient to answer your needs, really as it's main purpose is personal income tax.  You will need to file a T5 by the end of February.