My suggestion for a first year S-Corp in the COVID environment is to recognize now the reasonable compensation process wasn't followed correctly.
Issue 1099-NEC to all parties that should have been on payroll during 2020.
They will have to file Schedule C and pay the full Self-Employment tax for 2020.
You can make that consideration when you determine how much to write the 1099-NEC for.
This step shows you recognize the error, and attempted to correct as best you could at time of discovery. You cannot do retroactive payroll. (Start payroll for 2021 now.)
The amounts of the 1099--NECs are business expenses and will reduce S-Corp income that will pass through as income to the members in the same way compensation would have.
