Owner Draws

Problem

How to write checks to the owner, using Goldenseal payroll software.

Payments to company owner via owner draws, in Goldenseal accounting software.

Diagnosis

There are two basic ways to pay owners- through equity payments, or through payroll.

HINT-- If they enter Labor Hours for the owner's time and/or pay frequently, use the payroll approach. Otherwise use equity payments.

Solution

For payroll, follow these steps:

1. Create a Wage Schedule for the owner. For wage type, use Owner Hourly for pay by hour, Owner Salary for regular payment, Owner Draw for irregular.
2. Create an Employee account for owner. Assign wage schedule to them. Give them any tax packages or benefit packages (may need separate ones).
3. Enter hours. Do Write Payroll. If owner draw, they can type in the payment amount.

For equity payments, follow these steps:

1. Enter owner as an Owner (under Options- Other Lists).
2. Create an Equity Transfer (optional).
3. Create a check. Enter Owner as pay to type, enter owner in account field.
4. If they created an equity transfer, choose Equity Transfer in Transaction Paid popup, and enter it into the Reference field. Otherwise enter Pay on Account.

Special Topics has a more complete writeup about Accounting for Owner Payments.

Comments

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Entered 3/29/01 by Dennis. Updated 10/23/2010.