Owner's Equity Account

SoFLGal · ‎January 31, 2021

My husband opened an S-corp in 2019 and we had a bookkeeper setup the chart of accounts. She said to use the "Owner's Pay" under the equity account for the shareholder distribution. The distribution he received in 2019 is still showing up as a credit in 2020, which looks like he was paid more than he was on my year end reports. Since, this my first time using QB, I didn't know I was supposed to close the books in Jan 2020 for 2019. If I would've closed the books, would this amount have gone away? How do I remove the 2019 amount, so it doesn't continue to show for the 2020 tax year? HELP!

Rustler · ‎February 01, 2021

A distribution in an s-corp is not an equity event. it is an amount paid to shareholders, all shareholders.
the process is
hold a shareholer meeting and declare a distribution, date it is to be paid, amount per share at the minimum
journal entry to move the total amount out of retained earnings and into a liability account called distribution payable
then on the pay date, write the check and use the distribution payable account as the expense for the check

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Owner's Equity Account

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