20 – Salaries – Owners

Personnel Expenses

Synopsis

Account 20

Remarks:

The term “Owners” means those persons who, viewed in a practical way, are the owners of the business.  It is not intended to include technical owners of qualifying shares acquired solely for the purpose of enabling them to hold corporate office or to owners of small interests acquired as part of an employee incentive plan; as such holdings would not ordinarily imply a change in their status as employees.

To permit operating expenses to reflect a proper amount charged as a salary for managing the business, a definite monthly compensation plan should be set up for the proprietor, member, partner, or officer, and their compensation charged to this account whether or not withdrawn from the business.

If not withdrawn, it can be placed to the proprietor's or partner's credit through his personal account by crediting Drawings (Account 390).

Corporation salaries not withdrawn should be credited to Payroll Payable (Account 321).