Just A Reminder For Those Of You That Actually Pay Taxes :)

[[BV]]

Originally posted by cd34

If you are a Sole Proprietorship, Partnership or S Corporation, money that you take from the company that is not a payroll check is usually considered draw. The IRS doesn't really state you can do this for a corporation, but, an S corporation isn't really the same as a C Corporation. Since an S corporation flows through to your personal account, that 'draw' is profit anyhow.

I disagree with the draw = profit part.

For example let's say your scorp made a profit of 100k in 2004 but lets say you you have a total of 150k in draws in 2004

The tax burden is on the profit the scorp made not the amount you draw out of it. You will pay taxes on the 100K not the amount you drew. If you had taken no draws you will still pay taxes on the proffit. 100K

Cheers,
BV