It is important for the bookkeeper to track income taxes for the business and the owners. Tracking includes apprising management of current status and pending obligations. In addition, the bookkeeper must make sure the payments are made to the correct authority for the proper amount and assigned to the appropriate federal identification number.
A draw is any transfer of earnings in a self employment operation to the owner or on behalf of the owner is called a ‘Draw’. Typical legal entities that use this term include sole proprietorship and partnerships.
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 word used. The technical definition is: ‘A transfer of earnings from the business on behalf of the owner is referred to as a draw’.