What is owner distribution is what kind of account?

An owner distribution is not a specific type of account in the way a checking account or savings account is. Instead, it's a transaction related to a specific type of business structure, namely sole proprietorships, partnerships, and LLCs (Limited Liability Companies). It represents the withdrawal of profits or capital from a business by its owner(s).

Here's a breakdown:

• Not a separate account: The funds aren't held in a special "owner distribution" account. The money comes from the business's operating account (e.g., checking or business savings account) and is transferred to the owner's personal account.

• Tax implications: Owner distributions are crucial for tax purposes. They're not considered an expense to the business, unlike salaries or wages. The business doesn't deduct owner distributions, but the owner is taxed on the distributed amount as personal income. The specific tax implications vary widely depending on the type of business entity and the owner's overall tax situation.

• Different from salary/wages: If an owner is also an employee of the business (common in LLCs and some partnerships), they'll receive a salary or wages subject to payroll taxes (Social Security, Medicare, etc.). Owner distributions are in addition to (or instead of) salaries and are taxed differently.

• Impact on business records: Owner distributions are recorded in the business's accounting records as a reduction of retained earnings (the accumulated profits kept within the business).

In short, "owner distribution" describes a financial transaction, not an account type. The funds are moved from the business's bank accounts to the owner's personal accounts, impacting both the business's financial statements and the owner's personal tax filings.