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September 13, 2021
Question

how to enter withdraw profit?

  • September 13, 2021
  • 6 replies
  • 41 views

Hi, we make some profit as s-corp. How do i record this distribution of profit in quickbook?

6 replies

Rustler
Level 15
September 13, 2021

First check with the state to find out how often a shareholder meeting is required, yes even if there in one shareholder.  That meeting must be recorded on paper, and it is where the shareholders vote on issuing a distribution of profit.

 

If that is to be done, the total amount is moved from retained earnings to an account called distribution payable (you will have to create it the first time, a liability account).  Then on the date of distribution checks are written for the amount to each shareholder and you use the distribution payable account as the expense (reason) for the check

katherinejoyceO
Level 9
September 13, 2021

Hi fd_com,

 

I'll guide you on how to record the distribution of profit in QuickBooks. First off, you'll need to set up an owner's draw account. Then, write a check from an owner's draw account. 

 

Here's how:

 

  1. Go to the Lists menu, then select Chart of Accounts or press CTRL + A on your keyboard.
  2. At the bottom left choose Account, then click New.
  3. Select Equity, then click Continue.
  4. Enter the account name (Owner's Draw is recommended) and description.
  5. Click Save & Close.

 

Once done, go to the Banking menu to write a check. Here's how:

 

  1. in the Write Checks window, go to the Pay to the order of section. 
  2. Select the owner, and enter an amount next to the $ sign.
  3. Enter the amount of the check to the equity account you created to record the owner's draws, then click Save & Close to record the check.

 

For more insights about the owner's draw account, refer to this article: Set up and pay an owner's draw.

 

I also recommend consulting your accountant to make sure your books are accurate. 

 

For future reference, check this article to understand the Chart of Accounts in QuickBooks. 

 

Let me know if you have additional concerns. I'll be happy to help you again on your next posts. 

 

fd_comAuthor
September 14, 2021

@katherinejoyceO  what about the retain earning, can you show me step to move from retaining earning to some other account???

Rubielyn_J
Level 8
September 14, 2021

Thanks for getting back to this thread, @fd_com. Let me share additional information on how to handle retained earnings.

 

The total amount is moved from retained earnings to an account called distribution payable. To do this, you'll need first to create a liability account. 

 

Here's how:

 

  1. From the Lists menu, choose Chart of Accounts.
  2. In the Chart of Accounts window, right-click and click New from the pop-up menu.
  3. In the Account Type section, select Other Current Liability.
  4. Enter a name for the account.
  5. Once done, click Ok.

 

Then at the time of distribution, checks are written for the amount to each shareholder, and you use the distribution payable account as the expense for the transaction.

 

I also suggest consulting an accountant. This is to ensure that your book is accurate and balance. 

 

Additionally, let me share this article to help you set up, record, and manage upfront deposits in QuickBooks Desktop: Manage retainers.

 

Feel free to get back to this thread if you have further questions about the distribution of profit in QuickBooks. I'll be happy to assist you again. Keep safe and have a good one.