On October of this year, a friend of mine and I accepted to run a small advertisement magazine that publishes every 4 weeks (13 times per year). The type of service we provide doesn't require us to collect sales tax. We have around 7 vendors to pay, and about 40 clients, most of them are repeat clients. (No employees) We pay the owner of the magazine a set price per page.
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.
Basic office supplies.
Order of checks and stamp.
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
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.
- posted 12 years ago