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Draw - Owner's Draw

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Definition:

Owner's Draw, usually just "Draw" is the amount taken out by the owner of a sole proprietorship or partnership for his or her personal use. A self-employed business owner does not usually take a salary. Instead, he or she makes an initial investment (capital contribution) in the business from personal funds and during the course of the business takes money out as draw and invests more money, from profits or from personal savings.

Owner's draw decreases the owner's capital account. Typically, a check is written on the business account to the owner and it is deposited in the owner's personal account.

Be sure to keep business and personal spending separate. The owner's draw should be the only place where personal and business intersect.

Also Known As: Drawing account

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