Income paid to an owner in the form of W-2 or 1099 income.
There are several methods to draw money from a business that an owner of a company can use. These include W-2 wages, 1099 income, distributions, draws, shareholder's loans, K-1 distributions or guaranteed payments if the entity is a partnership. Money paid to an owner in the form of W-2 or 1099 income will appear on the Profit & Loss Statement as an expense. By contrast, money paid as a draw will only appear on the Balance Sheet. Not all business owners draw a salary in the form of a W-2. Some owners pay themselves as an independent contractor (1099).