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  #1  
Old 01-20-2009, 06:09 PM
bbxrider bbxrider is offline
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owners draw

my company is a proprietorship. during the year i have taken out some 'pay' and recorded it as owner draw. when i run the basic company p+l, it doesn't have any category for owners draw. my total income to that point is the sum of the owners draws + net income showing on the p+l. is there some other report that combines both the p+l and owner draw in one place for tax purposes?
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  #2  
Old 01-21-2009, 03:38 AM
Joe Williams Joe Williams is offline
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No, the Owner's Draw should be an Equity account. That is a balance sheet account and NOT part of the P&L. The draws taken using that account does not affect the Net Profit, only the amount on money in the bank account.
The Owner's Draw is the amount for YOUR taxable income, and you use the the P&L for the Schedule C income and deductions.
You may want to have a tax accountant do your taxes and have them list what lines for the tax form the accounts use so you can assign them to the accounts in QuickBooks.
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Old 01-21-2009, 12:09 PM
bbxrider bbxrider is offline
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ok thanks,
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Old 03-01-2009, 06:34 PM
VIS VIS is offline
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Quote:
Originally Posted by Joe Williams View Post
No, the Owner's Draw should be an Equity account. That is a balance sheet account and NOT part of the P&L. The draws taken using that account does not affect the Net Profit, only the amount on money in the bank account.
The Owner's Draw is the amount for YOUR taxable income, and you use the the P&L for the Schedule C income and deductions.
You may want to have a tax accountant do your taxes and have them list what lines for the tax form the accounts use so you can assign them to the accounts in QuickBooks.
Does this mean that the %15.3 SE tax only applies to what is NOT Owner Drawn? The %15 Fed Income tax (Not the SE Tax) does not apply to business profit?

If I take an owner draw for an amount of money one quarter, does that mean the drawn amount is what gets the %15.3 + %15 for Fed Income tax for that quarter?

I thought the end of the year you had to claim whatever profit your business makes as income... is that not the case?
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  #5  
Old 03-01-2009, 07:13 PM
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lisa_mn lisa_mn is offline
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Originally Posted by Joe Williams View Post
The Owner's Draw is the amount for YOUR taxable income, and you use the the P&L for the Schedule C income and deductions.
Joe - that's not true. A sole proprietor pays taxes based on the net profit of the business (as reported on schedule C) regardless of whether or not the owner takes any draws. The draw itself is not taxable income.
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  #6  
Old 03-02-2009, 03:34 AM
Joe Williams Joe Williams is offline
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Sorry, had head on wrong!
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  #7  
Old 08-26-2009, 01:44 PM
EXTouch EXTouch is offline
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Originally Posted by lisa_mn View Post
Joe - that's not true. A sole proprietor pays taxes based on the net profit of the business (as reported on schedule C) regardless of whether or not the owner takes any draws. The draw itself is not taxable income.
So I get that the owner pays taxes on the business profit/net income on the schedule C of their taxes.

But what about the individual? How do they report income for themselves when the only money they took from the business was in the form of owner draws?

Does retained earnings accrue from year to year or should it zero out at the beginning of each fiscal year?
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  #8  
Old 08-26-2009, 02:21 PM
bbxrider bbxrider is offline
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thats the way i understand it
say net income on sch c is 50000 and owners draw was 40000, retained earnings for the year would be increased by 10000
then if its 2009 and sch c net drops to 30000 :-( and owners draw was 35000, retained earnings drop by 5000
etc
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  #9  
Old 08-27-2009, 09:01 AM
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lisa_mn lisa_mn is offline
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Originally Posted by EXTouch View Post
So I get that the owner pays taxes on the business profit/net income on the schedule C of their taxes.

But what about the individual? How do they report income for themselves when the only money they took from the business was in the form of owner draws?

Does retained earnings accrue from year to year or should it zero out at the beginning of each fiscal year?
The draw is irrelevant. You are not taxed on the draw, you're taxed on the profit reported on schedule C.

Retained earnings is cumulative forever. BBX has is correct.
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