Owners draw / P&L clarification needed

@RedlineCreationsLLC  There are a few ifs, ands, and buts, so let's go in order.

A P&L report only contains income, other income, expenses, other expenses, and COGS.

As Owner's Draw is an Equity account, it should never be on a P&L. It won't affect the profit.

That being said, it can still impact the income taxes depending on the type of business.

For instance, a sole proprietor would have vanilla Owner's Draw. This does not generally impact the income taxes.

However, if it were a Partnership or S-Corp or such, you would have Guaranteed Payments or Shareholder Distributions or such like. These generally end up on the K-1 somewhere and have an impact on the personal income taxes of the officer involved.

Profit is separate from the owner's draw. A $1,000 profit stays $1,000. An owner's draw (like taking $2,000) is money from the business's equity, not an expense. Draws don't change the profit on the P&L but can impact taxes.