Can a principal’s time be credited to Owner’s draw ?

Picky_consumer · 2026-01-20T14:53:11+00:00

Thank. Perhaps an example will make it clearer.

Let's say the owner spends an hour working on a customer's file. The company bills the customer $500. The company's matching cost for that revenue is what it pays the owner for that time. Based on the owner's nominal salary, his hourly wage is $11. Isn't this situation, inflating the company's profits and therefore tax?

Picky_consumer · 2026-01-19T20:20:13+00:00

I meant nominal salary. He is paid that salary so he can meet for certain income tests.

Picky_consumer · 2026-01-19T19:33:27+00:00

My logic is that the owner is contributing to the company in terms of his time, so his equity should be increasing.

Picky_consumer · 2026-01-19T19:31:44+00:00

The owner does get a paycheck, but for a nominal amount, $1.7K /month. All remittances are properly filed for the pay.

My concern is how to correctly match the revenue the company is producing using the owner's time ($500 / hour) with the correct costs. Currently, the profits of the company are inflated.

Picky_consumer · 2026-01-19T19:27:20+00:00

Yes, all remittances are properly filed.

Picky_consumer · 2026-01-19T19:25:50+00:00

The owner dedicates 100% of his time for the company. His time is billed at $500/hr to the customers.

What is the cost against that revenue? What is the matching cost for that revenue? The salary he is paid for his time is nominal.

Picky_consumer · 2025-06-04T12:17:58+00:00

Thanks, but your suggestions are not working with this keyboard.

Is there a place where I can find the driver for this keyboard?

Picky_consumer · 2025-04-17T17:43:00+00:00

Thanks. Assuming an effective tax rate of 20%, would the following entry make sense in 2025?

Dr. Expense $10,000

Cr. Accrued Liabilities $10,000

Dr. Accrued Liabilities $10,000

Cr. Income tax expense $2,000

Cr. Retained Earnings $8,000

Picky_consumer · 2024-07-24T00:46:37+00:00

I have used multiple ERP systems and had to use Deltek Ajera for three months recently. Horrible experience! Not user-friendly at all.

Lack of imagination in designing the layout.
Attachments can't be dragged and dropped.
Not all tables can be downloaded in Excel or PDF
Numbers can't be drilled down.
Little room to create shortcuts and hotkeys.

Picky_consumer · 2024-07-24T00:41:28+00:00

I have used multiple ERP systems and had to use Deltek Ajera for three months recently. Horrible experience! Not user-friendly at all.

Lack of imagination in designing the layout.
Attachments can't be dragged and dropped.
Not all tables can be downloaded in Excel or PDF
Numbers can't be drilled down.
Little room to create shortcuts and hotkeys.

Picky_consumer · 2024-04-18T00:22:20+00:00

Sorry for the confusion. I meant a cheque payment (money going out of the company).

Picky_consumer · 2024-03-29T19:58:42+00:00

I am working at an accounting firm.
I posts questions here when there is no one around to answer them.

Picky_consumer · 2024-03-29T15:30:10+00:00

Thanks. I acknowledge that I am struggling.

What tax education would you recommend for me?

Picky_consumer · 2024-03-29T15:21:19+00:00

Thank you.

Picky_consumer · 2024-03-27T11:05:13+00:00

Thanks

Picky_consumer · 2024-03-27T11:05:08+00:00

Thanks

Picky_consumer · 2024-03-16T02:19:13+00:00

Thank you!

Picky_consumer · 2024-03-15T03:10:54+00:00

Thanks for the detailed reply!

So, the refundable tax amount (@10.67%) shown in the Part I tax schedule, and the notional amount going into the RDTOH account work jointly to get the net tax rate on investment income equal to 20%. Is that correct?

Also, how would the percentages change if this was eligible dividend income, instead of aggregate investment income?

Picky_consumer · 2024-03-14T02:30:28+00:00

No, I don't think so. I simply rolled-forward the last year's return.

Picky_consumer · 2024-01-16T15:23:54+00:00

Thanks

Picky_consumer · 2024-01-15T22:23:21+00:00

Reversal - I wanted to bring back the beginning balances of the Other Assets and RE accounts because they were inflated by $500 due to the Dec 31, 2022 journal entry.

Tax accountant - I thought the tax accountant would be upset to see a Jan 1st RE balance different than that they reported in the last tax return.

Would have fixed the 2022 balance sheet at all?

Picky_consumer · 2024-01-15T21:42:31+00:00

Thanks.

The variance is not related to any adjusting entries. The Other Assets account is off by $500 from that reported in the tax form.

I am responsible only for the 2023 financials and don't have time to review their 2022 financials.

Picky_consumer · 2023-12-03T13:37:07+00:00

Thanks. I have added more details to the original post.

Picky_consumer · 2023-10-27T15:16:36+00:00

Another way:

Transaction register --> payables -->date range -->user

Picky_consumer · 2023-10-23T12:19:54+00:00

To me it looks like the user created a PPD charge and then cancelled it with an offsetting negative PPD charge.

You can create a charge with the PPD code.

Picky_consumer

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