We created an S Corporation, two shareholders total and we both own an equal number of shares. We were told that QUICKBOOKS was the best choice for us to organize our business, create invoices, etc. We got QUICKBOOKS PREMIER EDITION and entered the company information in the program.
Our cycle is as follows: every 4th week we accept the ads from our clients, present them with a graphic proof of the ads, do corrections and bill them at the same time. We get their payment before everything goes for printing. About 13 days later, the magazine is out for distribution. During these 13 days, we pay all the vendors involved.
We have few questions about the subject:
1-) To distribute the income between us, every 4 weeks we withdraw some money. On the chart of accounts, we created one account called Owner's Draws (type: Equity) that we use for this purpose. Is this the correct way to collect the "profit"? We always make sure that we leave in every draw, enough money in the bank account that what we begin with to make sure we can cover ourselves in case of unexpected expenses. At the end of the year, will that additional money be shown as profit as well?
2-) We incurred in expenses to open and run the corporation, here are some example of expenses: Fees for in Corporation Professional fees for help forming the corporation. P.O.Box rental. Basic office supplies. Order of checks and stamp. Telephone line. Software, etc. Can we get reimbursement for these expenses from the corporation, and if yes, show those specific expenses but the check made to us personally? Under what accounts that would be classified?
3-)As far as I understand, from the second year on of existence of the corporation, either my partner or I have to be an employee of the corporation, is this correct? Do we need an employee?
4-)Of the initial money we use to open the bank account, now that there is additional monies in the account, can we withdraw the initial money back to us and if yes under what account would that be classified?
5-) In an accounting book that we bought, it says that from the very beginning we have to decide if we are going to run the business in an accrual or cash basis, but searching Quick Books, it seems that you can do either, it is just matter of setting the reports one way or another, is that correct?
6-) We use 3 people to distribute the books, we pay them as independents under a distribution account (Type: expense) but my partner and I do few distribution stops as well (only about $150 each, every 4 weeks) how do we pay ourselves for that activity?
7-) We pay to the owner of the magazine every 4 weeks, a set price per page, I created an account for it called "Page rent, John Smith" (Type: Expense) Is this correct?
Thank you in advance for your replies.