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M
Mike700
June 7, 2021
Question

how do you record S Corp quarterly taxes

  • June 7, 2021
  • 2 replies
  • 0 views

Last year my S corp made a profit.  I have left those proceeds in the company and they are showing on the balance sheet.  Basically undistributed income. (and in the corp checking account)

This year we are also showing a profit so far, Quarterly estimates are due.  

Can I pay those directly from the corporations Checking?  If yes, how do you record them?  (against last years undistributed income?)  I already paid the taxes on last years profit.  Or do you take a bonus pay the tax on the bonus and the net pays this years estimates?

2 replies

Rustler
Rustler
June 10, 2021

In an s-corp estimated taxes are a personal event since the s-corp is a pass through entity.

 

So either take an equity draw in the amount to be paid, and then pay it

or

set up an equity account called est taxes, and use that as the expense for the payment.

 

In either case the amount is a draw against equity.

    M
    MTS USA
    April 19, 2022

    Hi- Is this good even if there is still an initial investment balance that has not been drawn?

     

    Thanks!

    john-pero
    john-pero
    June 10, 2021

    Last year's profit would have passed through to each shareholders personal return. Unless you are the only shareholder, and even then. You should avoid paying any personal obligations with company checks. S-corps do not have the same freedom of equity movement that an LLC or sole prop enjoys. First money out to you has to be your reasonable W2 wage. After that if you take distributions or not is immaterial (unless your distribution places you in negative equity-which becomes taxable) since the distribution itself is not taxable, only your paper profit passes through as taxable.

     

    There is no need for bonus pay unless you are falling short on your W2 pay and that would be at year end.

     

     

    M
    Mike700Author
    June 10, 2021

    Thank you.

     

    I take a reasonable W2 but left the profits in the company last year and will take a distribution at the end of this year...Just want to make sure we have cash flow.

     

    So for personal estimated taxes, how should I record that in Quickbooks.  previous reply suggested a separate account name.  I can easily set that up.

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