I am looking to pay my income tax out of my business account relating to my Single Member LLC with no employees other than myself. I was thinking of adding the following in the Chart of Accounts:
Account Type: Equity
Detail Type: Owners Equity
Name: Owner's Income Tax
Description: Income Tax relating to LLC
I would then create a transaction of type Check with the following:
Payee: State \ Federal Income Tax
Category: Owner's Income Tax
Is this a valid way to log this transaction or am I completely way off on how this should be handled?
Go to Solution.
That's exactly how you should do it.Since income tax is a personal expense, and not a business expense, paying it from the company account is equivalent to a draw, and posting it to the equity section is exactly correct.It will also help you keep track of the tax payments so you don't overlook them when you prepare your tax return.Mark Wagner,CPA
Thank you Mark, much appreciated.
Can I set this up as equity - estimated taxes also?