As you mentioned, an S-Corp owner is probably taking a salary and distributions. You showed us to set the owner up as a vendor for the equity distribution. I assume the owner is set up a 2nd time as an employee for the W2 portion?? Thanks! Joe.
Thank you! I have learned SO much from your videos. I own an LLC with S Corp tax status. I am the only owner and only employee. I have already set myself up in QB as a W2 employee. Am I understanding you correctly that I also need to set myself up as a vendor when I categorize my Owner's Distribution bank transactions? So basically I will be in QB as both an employee and a vendor? Thank you!!
How is the tax paid for distributions? Is it more beneficial for an owner to take a higher distribution vs a lower salary? Which one is lesser on the tax bracket for an S-corp?
You need to pay yourself a "reasonable compensation" in W2 wages as a S-corp owner. The profits of the business will be taxed regardless of how much you take for distributions.
So Glad that I found your tutorials, which I have subscribed to. You explain everything so well, I still have a lot of your tutorials to watch, I am learning so much from you, so a very big thankyou.🙂
What would be an appropriate proportion for an owner of an S Corp. which usually pays herself via W2 to instead split her annual income between W-2 and distributions? Do you have a video that talks about that? Thanks!
There is no rule about percentage breakout between the two. You need to pay yourself a "reasonable compensation" in W2 wages as a S-corp owner. We are planning more videos on reasonable compensation!
How about business owners drawing money out of the business account and use the money to pay off a business vehicle loan? It is still considered an owner draw?
No, the business vehicle loan should be on the balance sheet as a debt, and that payment would be recorded against the loan to reduce the loan balance.
Could you please create a video detailing the entire process of what to do when you have a client for the first time as a bookkeeper? Include the initial steps, the do's, and the don'ts. We would really appreciate it! Btw, thanks for your video we really appreciate it. Very informative and helpful.
Thank you for this, I've been wondering how to set up a draw....I have used Quicken for personal accounting for years, and just started a new sole proprietorship. I plan on using quickbooks for isolation of business from personal, but can you maybe discuss is there a pathway to tracking both on quickbooks? Or is it better to maintain complete separation?
good question. I recommend separating them completely - you can keep your quicken for personal and set up a QBO file for your new business (congrats by the way!). I use Monarch for my personal finances and QBO for the business. I've thought about if it's even possible to do both in QBO, and it really isn't.
