Also sometimes simply called a “draw,” an owner’s draw is money that is taken out of your business directly and is not taxed via payroll.
Draws are often taken by owners of sole proprietorships, partnerships, or LLCs, as the owner may not be eligible to be on payroll.
Remember, cash and assets you have taken out of your business as a draw are still most likely subject to taxes on a personal level. Here’s an overview of the pros and cons of an owner’s draw and how you can do one.
Updated September 26, 2017
This article provides general information and shouldn’t be construed as tax, benefits, legal, or HR advice. Rules and regulations may change over time and may vary by location. So, please consult an appropriately certified expert (such as a lawyer, CPA, tax advisor, licensed broker, or HR expert) for advice specific to your circumstances.