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    DJOE's Avatar
    DJOE Posts: 4, Reputation: 1
    New Member
    		  
    #1

    Mar 25, 2008, 08:50 AM
    S Corp - Owner Withdraw Funds
    ;)
    Hello!
    I have an S Corporation with 3 Shareholders. They would like to take money out of the company by check. (Not a huge amount) What account should I debit? How does this affect their K-1's?

    DR:
    CR: Cash

    Should their be any follow-up entries for year-end or tax purposes?

    HELP!! And THANK-YOU! Your help is much appreciated!!
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
    		  
    #2

    Mar 26, 2008, 11:20 PM
    You're debiting some kind of distribution account, which is similar to a drawing account for a sole proprietorship and partnership. For tax purposes, an S corp is treated much like a partnetship, and I call their "drawing" account for partnerships "Distribution, Person A," "Distribution, Person B." Etc. These accounts would be closed out to their respective Capital accounts at year-end. (Cr the distribution & Dr the Capital.)

    As for the K-1, wow, been like 8 years since I've done one of those. Amazing how the memory slips after that much time. :-) You might want to post specific questions on the tax forum, but in the meantime I can at least point you to the instructions:

    http://www.irs.gov/pub/irs-pdf/i1120ssk.pdf
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