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Record Owner Distribution for S-Corp

I've seen tutorials for setting up and paying an owner's draw, but not for owner's distribution.

 

I'm using QB Online Simple Start with the self-service payroll feature.

 

I am a single-member LLC filing as an S-Corp. I use the payroll feature to pay myself a reasonable salary each month. After that, I send myself an owner's distribution. This is how I currently send and record the distribution, which I suspect isn't the correct way:

 

1. I log into my business bank account and initiate a transfer from my business checking to personal checking.

2. I log into QB, find the transaction (QB is synced to my business account), and categorize it as "Owner Distribution" (I've already created an Equity account called Owner Distributions.)

 

One problem I see is that QB sees this as an Expense, which I understand is wrong.

 

Should I be initiating the distribution through QB instead of my business checking account? If so, how? I can't find any tutorials that lists the steps to do this.

Solved
Best answer 05-02-2019

Accepted Solutions
Established Community Backer ***

Re: Record Owner Distribution for S-Corp


@micabeach wrote:

 

 

 

The reason I thought I was doing this wrong is because I noticed in my transaction history that these Owner Distributions, when I review them and assign them to the category of Owner Distribution, get listed under the Reviewed tab as "Added to: Expense: Owner Distributions ..." If I click on Expenses menu item (far left), I see them listed here.  (Is that okay?) When I click on Accounting menu item, they are appropriately being recorded under the Owner Distributions account. They are *not* showing up on my P&L statement. I guess QB knows not to assign these as business expenses because the category is an Equity type account.

 

 


The word "Expense" in QBO means two things:

1. A type of transaction. It is a cash transaction that pulls funds from a bank or credit card account.  It can be allocated to an expense account (in the Category column), or not, eg. a loan payment, which is allocated to a liability type account, a balance sheet account

2. A type of account.  A P&L type account. The other ones are income-type and COGS-type accounts

One should understand the difference when navigating QBO. 

 

"If I click on Expenses menu item (far left), I see them listed here."

These are expense-type transactions

 

"I changed the name from "Owner Distribution" to "Shareholder Distribution." Should I keep the Detail Type "Owner's Equity," or should I change that to something like "Partner Distributions"?"

 

Details Types in QBO are not used for anything.   The feature is a bridge to nowhere it seems. They may be used by Pro Series the Intuit tax prep software for accountants. If you have an accountant user who does your taxes, ask them.  Otherwise it makes no difference, but fill in the closest description in case they one day are used for tax mapping if they ever enable export to tax prep software for non-accountant users.  "Partner Distributions" is no more accurate than "Owner's Equity", so take your pick. 

 

"I do have the payroll feature, and because I can initiate via QB my pay to myself and contractors , and QB can send e-payments to the IRS, I assumed there was a way to initiate a distribution via QB."

You could pay yourself as a contractor, but there is an extra fee, and requires set-up, so I would just go the bank website, which is just as easy, maybe easier, and free. 

 

"So, given all this, it looks like I'm doing this correctly."

Yes

 

9 Comments
Moderator

Re: Record Owner Distribution for S-Corp

Hi there, @micabeach.

 

Thanks for reaching out to us in the Community and for providing complete details of your concern. I'm here to share some insights about recording owner distribution in QuickBooks Online (QBO).

 

An owner's distribution is not an expense to the LLC or income to the owner. Rather, the owner is taxed on the LLC's income and expenses before any distribution of profits. To do this in Quickbooks, you can create a check and designate the tax line item each should be assigned to. There should be no expense category line item assigned for owner's distribution.

 

I also suggest reaching out to your accountant for further assistance with recording this in QBO.

 

Please post again or leave a comment should you have any follow-up questions. I'll be happy to help. Have a good one.

Frequent Explorer *

Re: Record Owner Distribution for S-Corp

> To do this in Quickbooks, you can create a check and designate the tax line item each should be assigned to.

 

Via these steps? (which is what online searching suggested):

 

(Also, I don't want to write a physical check, but instead have it directly transferred from my business checking account to my personal account via direct deposit, which is how I handle my payroll.)

 

1. Click the plus symbol

2. Under Vendors, click Check (seems odd, as I wouldn't consider myself a vendor)

3. For Payee, select my name

4. Complete check details. For category, select "Owner Distributions"

5. Click Save and Close

 

When I did step #5, I'm taken back to the main screen. Where did the check go?

Moderator

Re: Record Owner Distribution for S-Corp

Hey there, micabeach.

Allow me to take over and help you find the check in QuickBooks Online.

 

You can use the Advanced Search feature in QuickBooks Online to search for the check.

 

Here's how:

  1. Select the Magnifying Glass on the Toolbar.
  2. Enter the date, amount, or transaction number you’re looking for, then select the desired transaction.
  3. If the transaction you're looking for does not appear on the results list, select Advanced Search.
  4. Adjust the filters to find the type of data you want. For example, use the following filters to find all transactions from the past 30 days with a value of $100.
    1. Change Reference no. to Last Modified Date.
    2. Change Today to Past 30 Days.
    3. Select Search. This should give you a list of transactions that meet your filters.
    4. Narrow the list by changing Last Modified Date to Amount. Choose Equals from the second drop-down, then type 100.
    5. Select Add Filter.

 

 

You can get more details in this article: https://quickbooks.intuit.com/community/Reports-and-accounting/How-to-search-for-transactions/m-p/18....

 

Also, you can pull up the Check Detail report. See the steps below:

  1. Click Reports in the left panel.
  2. Search the Check Detail in the search field.

 

 

Fill me in if you have any other concerns with QuickBooks. I'm here to help you out.

Frequent Explorer *

Re: Record Owner Distribution for S-Corp

I found the check using the search feature you described. But I still don't see any way to actually *send* the money from my business account to my personal checking account. There is no "send check now via direct deposit" kind of button. There is simply a "Save and close" button, which simply makes the check vanish and takes me back to the main page.

QuickBooks Team

Re: Record Owner Distribution for S-Corp

Glad to hear again from you, @micabeach.

 

I'd be glad to help walk you through recording your transfer transactions.

  1. Go the Plus Icon(+).
  2. Choose Transfer.
  3. In the Transfer Funds From drop down list, select the bank account that the funds are coming out of.

  4. From the Transfer Funds To drop down list, select the bank account the funds are being deposited into.

  5. Enter the Transfer Amount.

  6. Type in the Date.

  7. Click Save and Close.

That should do it! For additional insights, you may check these transactions:

If I can be of further assistance with managing your S-Corp transactions, feel free to click the Reply button. Wishing you well.

Established Community Backer ***

Re: Record Owner Distribution for S-Corp


@micabeach wrote:

 

 

One problem I see is that QB sees this as an Expense, which I understand is wrong.

 

 


The robots are tripping over each other on this one, spewing gibberish.

 

Everything you describe makes sense except the quoted statement above.

Could it be that you are confusing an expense-type transaction with an expense on the P&L?

You could use an expense-type transaction to pay a loan for example, or Shareholder Distribution, neither of which would affect the P&L (if the Shareholder Distribution is an equity type account, which you say it is)

BTW it's Shareholder, not Owner.

 

"Should I be initiating the distribution through QB instead of my business checking account? "

you cannot initiate transactions in QBO. It's a record-keeping program, not a bank.  Actually, you can initiate some things, like payroll or bill payments, if you signed up for these extra-fee services.  Besides you said you already logged into your business bank account and initiated a transfer. By business bank account, you must mean your bank's website

 

 

 

Frequent Explorer *

Re: Record Owner Distribution for S-Corp

> I'd be glad to help walk you through recording your transfer transactions.

 

So do this after I create and save the check? As with the check option, the last step (#7) when you hit Save and Close simply documents that you documented a transfer. It doesn't look like it actually moves any money around. How to actually initiate the transfer through QB (if that's what I need to do) - so actual money goes from my business account to my my personal checking account - is what I'm looking for.

 

I did go back to the check option and do see "Print check" at the bottom. So I suspect I could print the check, take it to the bank, etc. But again, I'm looking to do this electronically.

Frequent Explorer *

Re: Record Owner Distribution for S-Corp

> The robots are tripping over each other on this one, spewing gibberish.

 

I see that now. That lack of continuity from one reply to the next and the level of non-response to the actual question, just adds to the confusion. Your reply, however, is sensible and responsive. So thank you!

 

> Could it be that you are confusing an expense-type transaction with an expense on the P&L?

 

That's possible. The reason I thought I was doing this wrong is because I noticed in my transaction history that these Owner Distributions, when I review them and assign them to the category of Owner Distribution, get listed under the Reviewed tab as "Added to: Expense: Owner Distributions ..." If I click on Expenses menu item (far left), I see them listed here.  (Is that okay?) When I click on Accounting menu item, they are appropriately being recorded under the Owner Distributions account. They are *not* showing up on my P&L statement. I guess QB knows not to assign these as business expenses because the category is an Equity type account.

 

> BTW it's Shareholder, not Owner.

 

Ah ... I changed the name from "Owner Distribution" to "Shareholder Distribution." Should I keep the Detail Type "Owner's Equity," or should I change that to something like "Partner Distributions"?

 

> you cannot initiate transactions in QBO. It's a record-keeping program, not a bank. Actually, you can initiate some things, like payroll or bill payments, if you signed up for these extra-fee services.

 

Correct. I do have the payroll feature, and because I can initiate via QB my pay to myself and contractors , and QB can send e-payments to the IRS, I assumed there was a way to initiate a distribution via QB.

 

> Besides you said you already logged into your business bank account and initiated a transfer.

> By business bank account, you must mean your bank's website

 

Correct - my bank's website.

 

So, given all this, it looks like I'm doing this correctly.

 

I did find this link (https://quickbooks.intuit.com/community/Payments/Can-I-use-Contractor-direct-deposit-for-partner-dis...) that suggests how to initiate distributions via QB using direct deposit, but if the approach I'm currently using is okay, I'll stick with that.

Established Community Backer ***

Re: Record Owner Distribution for S-Corp


@micabeach wrote:

 

 

 

The reason I thought I was doing this wrong is because I noticed in my transaction history that these Owner Distributions, when I review them and assign them to the category of Owner Distribution, get listed under the Reviewed tab as "Added to: Expense: Owner Distributions ..." If I click on Expenses menu item (far left), I see them listed here.  (Is that okay?) When I click on Accounting menu item, they are appropriately being recorded under the Owner Distributions account. They are *not* showing up on my P&L statement. I guess QB knows not to assign these as business expenses because the category is an Equity type account.

 

 


The word "Expense" in QBO means two things:

1. A type of transaction. It is a cash transaction that pulls funds from a bank or credit card account.  It can be allocated to an expense account (in the Category column), or not, eg. a loan payment, which is allocated to a liability type account, a balance sheet account

2. A type of account.  A P&L type account. The other ones are income-type and COGS-type accounts

One should understand the difference when navigating QBO. 

 

"If I click on Expenses menu item (far left), I see them listed here."

These are expense-type transactions

 

"I changed the name from "Owner Distribution" to "Shareholder Distribution." Should I keep the Detail Type "Owner's Equity," or should I change that to something like "Partner Distributions"?"

 

Details Types in QBO are not used for anything.   The feature is a bridge to nowhere it seems. They may be used by Pro Series the Intuit tax prep software for accountants. If you have an accountant user who does your taxes, ask them.  Otherwise it makes no difference, but fill in the closest description in case they one day are used for tax mapping if they ever enable export to tax prep software for non-accountant users.  "Partner Distributions" is no more accurate than "Owner's Equity", so take your pick. 

 

"I do have the payroll feature, and because I can initiate via QB my pay to myself and contractors , and QB can send e-payments to the IRS, I assumed there was a way to initiate a distribution via QB."

You could pay yourself as a contractor, but there is an extra fee, and requires set-up, so I would just go the bank website, which is just as easy, maybe easier, and free. 

 

"So, given all this, it looks like I'm doing this correctly."

Yes

 

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