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Corporate payment to investors of common or preferred stock. This payment is authorized by the Board of Directors and paid based on a schedule prescribed by that board. It is in effect a form of a return on the investment.

Owner’s Draw in Business


When an owner of a small business operation transfers money from the business bank account to their personal bank account the transaction is commonly referred to as a ‘Draw’.  There are other terms but this is the traditional term used.   The [...]

Dividends and Distributions –Use in the Proper Context


Dividends and distributions refer to the payment of cash to investors.  So why two separate terms?  Well, the term is tied back to the type of entity that makes the payment.  Simply stated, regular corporations, i.e. C-Corporations as identified [...]

Passive Income


Passive income is a form of earning money without materially participating in the activity from which the income is derived.  There are two definitions for the reader to understand.  There is the common business definition and the tax code [...]