If we received a PPP loan and we were to pay bonuses during our 8-week wage period, should these bonuses be allocated to a special QB payroll item or should we just use our normal "bonus" payroll item? Not sure if we have to track these payments separately and if the tax structure for COVID bonuses are different than regular bonuses.
Thanks for any help you might have. Sort of in a hurry because we will likely payout these bonuses today!
Wages including hourly, salary, vacation, sick pay, bonuses are all allowable payroll expenses per the PPP loan rules. That being said, I would only include regular bonuses which were included in your original average payroll calculation for your loan application and approval. Giving out an annual $50k per employee now might raise some red flags as that might constitute over 50% of your payroll costs. Regular bonus pay that might account for 10-30% of gross wage for the 8 ( now 24 weeks per act of Congress awaiting sigature) shouldn't raise eyebrows.
There is no different tax treatment of bonus pay. If you normally treat it as 100% taxable and each and every paycheck includes some bonus that is one thing. Annual bonus pay however is subject to usually lower flat rate tax treatment. Otherwise too much tax could be taken out .
Additional thought. Even though bonus pay is an allowable payment (not expense since IRS has ruled that PPP loan psyroll is not a tax deductible expense even though taxable to employee) the pzyment of only bonuses WITHOUT an underlying companion payment for 40 hours of weekly work will jeopardize your forgiveness by not meeting your FTE (full time equivalent) workforce.