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Buy nowI just completed my first year in business and want to ensure I am handling my retainted earnings account correctly. I am the sole shareholder of an S Corp and want to know if I should leave my distributions in my Retained Earnings account or transfer them into a Owner equity account and draw from there. Since I am pass thru corporation the retained earnings which remained after I paid myself a salary is my distribution (not a dividend).
I am currently leaving the money in my business checking and drawing as needed debiting the retained earnings account.
For bookkeeping purposes, is it best to just leave it in Retained Earnings or Zero out the retained earnings and deposit it into an Owner equity account and use a Draw account to subtract from my equity?
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