I am the president of the corp. on salary for 1,000 per week.... and I
also take an owner's draw........I own 700 stocks so far out of
1,000.....how do I pay myself Dividends and how much Do I pay and
when.............thankyou

Hello scdi-ga,

I am happy to work with you again on this! Taking into account my
previous research and a refresher on this, here is my answer for you:

Basically, you can pay yourself whenever you want, how much you want.
The only catch is, you also have to pay the other people who own the
300 stocks on a pro-rate basis. For example, if you take out $10 for
each stock for the month of August, you would get $7,000 for yourself,
but you would also have to pay $3,000 to the other stock holders
(based on how many stocks they own). Again there are no rules on how
much (but you don't want to cripple your company). The only catch is:
Everyone with stock needs to get their share as well. There is no way
to get around this rule in an S Corporation when paying dividends.

All the best,

tisme-ga


Search Strategy: 
"s corporation" "owner's draw"
"s corporation" "dividends"
"s corporation" "dividends" limit
"s corporation" "dividends" limits

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Clarification of Answer by tisme-ga on 11 Aug 2006 17:53 PDT

Hello scdi-ga,

My personal suggestion would be to do it monthly, but again the choice
is completely up to you!

tisme-ga

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Request for Answer Clarification by scdi-ga on 11 Aug 2006 20:55 PDT

hi very informitive....but I own all the stocks in the co.............
I just have not issued the other 300 yet !..I am the only stock holder.....
Do I  make an account in Quickbook for dividends? and are the dividends paid 
in addition to the salary and the owner's draw.................
thankyou.

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Clarification of Answer by tisme-ga on 11 Aug 2006 21:17 PDT

Hello scdi-ga,

Again, they can be in addition to salary. The difference is that a
salary is generally negotiated and a set amount (that the majority of
stockholders agree to). Dividends are a way to give something back to
the investors immediately, either as a one time payment to distrubute
cash or a percentage of earnings/income. Since you own all the stock,
you don't have to worry too much about it. Why don't you just increase
your salary instead of paying yourself dividends?

Of course, if you do want to give out dividends for whatever reason,
you could set up a seperate account for dividends in Quickbooks. I
would not recommend this as it will generate extra paperwork/accounts,
unless you find tax incentives for doing so. You would want to use
dividends more when there are other shareholders.

I hope this helps!

tisme-ga

Bi-weekly.. Some do it annualy in lumps (millions)

tisme is right, on all counts. that is the correct way to do it, but not the best. 

You don't really take a "draw" from an s-corp, that is a term for sole
proprietors. Just take a salary, of whatever amount you would like,
that can both meet your needs and keep your company afloat. If you
need more, make it a "productivity bonus", or some such other clever
class, but keep it in salary.

I guess, you could just consider your draw a dividend, but when it
comes to tax time, your preparer will just reclass all amounts taken
that aren't salary as owner distributions. Just make it clear in your
account naming structure what it is your are taking from the co. Quick
books is for management and finance. As long as you both know what it
means, you can name the account "Pointy clown hat purchase and
storage", the name is irrelevant.