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Paying an owner or partner

Owners of sole proprietorships, as well as partners in unincorporated partnerships, are not on the business payroll. Instead, they have equity in the business. The equity of a business increases when the business makes a profit.

Owners and partners can take money out of the business by drawing on their equity. Payments to owners or partners are not business expenses unless the person is being reimbursed for a business expense paid for with personal funds.

If you track time for owners or partners, you can write a check against equity that is based on the number of hours worked.

Write a regular check for any amount as a draw against the owner's or partner's equity.

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