There are two ways to pay a business owner who takes irregular paychecks.
The first one is by issuing an owner’s draw. Before doing so, it’s important to first set up an Owner’s Equity account. When creating this account, select Equity or Owner’s Equity as the account type.
After establishing the account, proceed to create a regular check instead of going through the payroll system. Make sure to record the transaction in the Owner’s Equity account you created earlier.
To ensure accurate tax deductions from the owner’s paycheck and that they're properly reported, it’s advisable to consult with a tax advisor. They can help determine the best way to ensure taxes are calculated and reported correctly.
The second one is by creating an unscheduled paycheck. If you prefer to process payments through payroll, you can create an unscheduled paycheck and then check in with your accountant to ensure everything is recorded accurately.
Additionally, you can check out these articles for future references in handling your state taxes:
If you need assistance with recording transactions or setting up payroll, I'm here to help. Let's make sure your payments and tax responsibilities are managed smoothly.
