(Rounding #'s in this example)
Shareholder owes corporation $30,000 (shareholder loan in debit balance).
Corporation will clear through a management bonus.
Gross bonus should be $35,000.
This ensures that, after deducting $5,000 for payroll remittances (including income tax withheld and CPP contributions), the net amount payable to the shareholder is $30,000, effectively clearing the loan balance.
Does anyone see it differently?
Hi,
I’m not sure what level of resources you may be looking for, but I see that places like Indigo have a selection at various levels, from basic bookkeeping up to intermediate accounting, accounting for payroll, etc
See link for example: Buy Accounting Books Online | Indigo
Depends what you’re trying to achieve.
Management bonus if deferring the income recognition to the shareholder to the next year, in which case you PAY (yes, physically pay) the employee/shareholder in the following year - generates a T4 and appropriate RP entries as usual…accruing the bonus in 2024 as a payable and redepositing the net amount paid to clear the debt. Doesn’t get rid of the interest due on the s/loan. Cleanest solution.
Salary in 2024 (late-filed and penalty-laden T4 on the CPP - no tax requirement).
Declare a dividend to clear in 2024 (T5 would be late-filed).
Pick yer poison.