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SMAB
Level 1

Owner's Draw (Corporation) For Personal Income Tax

I use the same Credit Union for my business (corporation, NOT a sole proprietor or LLC) and personal accounts and they are connected. I am able to transfer funds from my business checking account to my personal savings account using the same dashboard. I do this weekly to cover my personal income tax. 

 

I do NOT write a check to do this.

 

And I do NOT have banking connected to QB, so all the guides out there are supremely unhelpful.

 

How do I record this as an owners draw? Is it an expense with the payee being the IRS and the category being owners personal pay? Or should it be a transfer because that is how it appears on my bank statement?

 

Thanks in advance!

3 Comments 3
MorganB
Content Leader

Owner's Draw (Corporation) For Personal Income Tax

Thanks for joining us here in the Community, SMAB.

 

I want to make sure you're able to get this transaction recorded correctly in your QuickBooks Online account.

 

In this instance I recommend consulting your accountant for the best action moving forward. They'll be able to advise you of the best way to record this entry based on your unique business setup and workflows. If you don't currently have an accountant, you may be interested in a new service from Intuit called QuickBooks Expert Assisted. Here you'll be able to connect with a live accounting agent to receive answers for more in depth questions. You can find out more info here: Expert Assisted

 

If you need any additional assistance, please don't hesitate to reach back out. I'll be help in any way that I can.

Rainflurry
Level 14

Owner's Draw (Corporation) For Personal Income Tax

@SMAB 

 

This answer assumes you're 100% owner of the S-Corp.  You can use either an Expense or Check transaction to do this.  Keep in mind, QB calls these forms "Expense" and "Check" but that doesn't mean they're only for Expenses or Checks, it's just the name of the form used to enter the transaction. 

 

Since there's no physical check, you can use EFT as the check number or reference number on the Expense.  You are the payee, the category (account) listed on the check/expense should be Shareholder Distribution (equity).  This is not a business expense (it's a reduction in your equity) because these distributions are being made to you personally to pay your personal estimated income tax.  It wouldn't matter if these distributions were being made to you personally to make your car payment, they would still be recorded the same way.

SMAB
Level 1

Owner's Draw (Corporation) For Personal Income Tax

Thanks Rainflurry,

So it would be a shareholder distribution instead of Owner's Pay & Personal Expenses? Or could it be either because both are sub accounts of the Equity account category?

Thanks in advance!

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