Any CPA’s here?

[Jluzader]

I work at a company and we had a huge 4th quarter 2019 compared to 3rd quarter 2019. My bonus was smaller for the 4th Q and was told it was because of end of year depreciation. Is this an excuse or what should I say? Thanks team JB

 

[2kwik4u]

Sounds like the bonus is based on profitability not sales.

It's possible that you can have a high sales number, then depreciate all your equipment in the business and theoretically lose money (or simply not profit) that quarter.

I would ask for details on how your bonus is calculated, and what drives the factors in those calculations.

 

[Jluzader]

That’s correct, I get profit sharing but getting numbers from them in almost hidden. Thank you for your reply.

 

[ScreaminJay]

I work under a profit based raise and bonus system also and we were told yesterday there wouldn’t be any movement on that or evaluations from 2020 until at least March ‘21. Sucks but nothing really to be done about it, imo.

 

[Babin Farms]

Just remember what a bonus is, an amount of money added to wages on a seasonal basis, especially as a reward for good performance that is not guaranteed. Unless you have a contract that states that you get "X" amount for a bonus based on sales or another gauge the company does not have to give out bonuses. I've seen where companies give out a bonus, the next year do not and the employees get upset to the point the company stopped giving bonuses all together.
I am thankful to still be working and would be especially thankful for anything above my normal wages in times like these where some are not even able to work, pay bills and have to decide on buying food or prescriptions. It's all about perspective.

 

[2kwik4u]

That’s correct, I get profit sharing but getting numbers from them in almost hidden. Thank you for your reply.

Profit sharing is a rough one since the numbers can be manipulated to increase or decrease profit as needed. Sometimes it's good to reduce profit for the year for tax purposes. Can also be good to reduce profits to save cash for a perceived downturn next year, or to reinvest in the company for new equipment or additional staff. Which leaves straight profit sharing bonuses somewhat at the whims of the accountants an executives.

Company I work for has the most absurd bonus structure I've ever seen. I get a salary + bonus compensation plan, and the bonus "starts" at 10%, then has a multiplier that is chosen by the President based on a number of business indicators, not just profit, but also backlog, sales number for the year, as well as a "gut feel" portion. That multiplier can be as high as four and as low as zero. So my bonus could be as much as 40% of base pay, and as low as 0%. I managed an unusually large raise this year (~30%) as well as a bump to a 15% base bonus, so my next year should be pretty dang good, however that multiplier hangs out there like a giant unknown until the president releases his numbers at the end of the year. He's pretty transparent about how he came up with the number, and we have over 20 years of history on how the number was chosen, so we can make some good predictions, but it's still borked up a time a two. For instance, last year we got paid a 1.0 multiplier despite having one of the best sales years on record. The problem was an accounting/inventory error that discovered mid year. Led to us having to pay taxes on inventory in house that we didn't realize we had. I'm not sure of the exact problem there, but our profits were nearly zero (I think we made like $150k on $75mil in sales). It was a big deal, and "by the numbers" we should have gotten a big old goose egg of NO bonus. The president used his discretionary portion of the formula to bring it up to a 1.0 because he realized a lot of people had busted their butt all year to make those sales, and it's a big part of a lot of peoples yearly income number.

Either way, good luck man. I've been in a position where the salary barely covered the rent and the bonus was needed to make the family budget work. Hopefully you're not in that spot and the bonus is just "beer money". Still sucks to lose that expected cash, but it hurts a lot less when the bills are still paid.

 

[Jluzader]

2kwik4u

Spot on, I am in the same boat.