This is the record of who owns the business, what they are paid, and what they take out.
Officers
Each officer is held with a name, a title, an ownership percentage, and an annual compensation figure. Only the last four digits of a social security number are stored.
A running total ownership allocated shows how much of the business has been accounted for. It should reach one hundred per cent; anything less means an owner is missing from the record.
Compensation
Pay is recorded per pay period with a gross amount, a net amount, and the federal tax, state tax and FICA withheld.
How much an owner should pay themselves is a question with a legal floor rather than a free choice — see reasonable compensation.
Distributions
Money taken out that is not wages is recorded separately, with a date, an amount and a description.
The separation matters. Wages and distributions are taxed differently, and treating one as the other is the most common source of a surprise tax bill for an owner-operator. See owner distributions and owner's draw.
Year-end adjustments
Entries made once a year rather than through normal trading: depreciation, amortization, and other adjustments such as a deduction claimed on a vehicle.
These are real costs that never appear as a payment, which is why they have their own place. See depreciation and amortization.