Pay an Owner or Partner
Owners or partners who are not set up as employees (such as a sole proprietor or partnership), still need to receive compensation through an owner or partner draw. They may also want to collect payment for work performed, or withdraw funds to make company purchases. There are tax implications for different types of payments; you may want to discuss them with your accountant before issuing a payment.
Note: Owners of an incorporated company often find some advantages in being paid, in part, as salaried employees, as well as receiving dividends. Talk to your accountant about how to identify payments and dividends for owners of a corporation.
To issue a payment to an owner (sole proprietorship) or partner (partnership):
- Set up the owner/partner as a Vendor.
- Make a payment:
- In the Home window, click Banking on the navigation pane.
- In the Tasks pane, right-click the Pay Bills icon and select Pay Expenses.
- Enter the owners name in the Vendor field.
- Enter the Account from which the owner will be paid (a cash draws or Owner Equity account).
- Enter the amount and specify No Tax deductions.
- If you want to track the payment against a project, you can allocate the amount.
- Click the Print button to generate a payment cheque (if you issue cheques through Sage 50 Accounting).
- Click Process to complete the payment.
Note that a draw or dividend will not show on the project income statement unless it is allocated to an expense (5000) account; if you do not allocate to an expense account, the draw will show on the project allocation report but not the income report.