Can I Pay an Owner or Shareholder Distribution from Payroll?
Paying owner or shareholder distributions are payments of corporate earnings and not taxed as regular income through payroll.
To pay a distribution to an owner or shareholder you can set up a non-taxable money type, and apply the amount of the distribution in payroll, but the owner/shareholder will not have taxes deducted or receive a W-2 at year-end.
For further info, see the IRS page Paying Yourself from the IRS website.
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