A C corporation is a separate taxpayer. An owner cannot treat its bank account like a personal checking account. Compensation for services, a dividend, reimbursement, and a genuine loan are different transactions even when each results in cash reaching the same person.

Compensation must be supported by actual services and reviewed for reasonableness. A shareholder loan needs facts consistent with debt, such as an agreement, repayment terms, and actual payments. Calling an unexplained withdrawal a loan after the fact may not resolve its tax treatment.

Keep the decision and its documentation together. The bookkeeper should not have to guess whether a transfer was payroll, repayment, or a distribution. Review unusual owner transactions before closing the annual books and issuing tax forms.

Your next steps

• Document the reason for each owner transfer.
• Keep payroll, loan, and distribution records separate.
• Review significant transactions before year-end.

General education, not individualized tax or legal advice. Illustrations use stated assumptions and do not promise a refund or tax saving.