Expert: Ed McFarland - 7/24/2006

Question
I just started an incorporation here in Quebec. I'm using Simply Accounting for the first time and I'm trying to organize my charter of accounts so that I can take myself cash from the company account and later pay it as dividends to myself at the end of the year. Right now I created an account called "Due to individual shareholder(s) (GIFI 3261)" when I take money, I credit the corporate bank account and i debit due to shareholders. This has the effect of reducing the bank account properly but the due to shareholders account goes into the negative. Aren't liabilities supposed to be positive amounts? How do I correctly transfer money from the bank account to due to shareholders?

Answer
The specifics of Canadian accounting rules are not my long suit. However, what you are doing is creating negative equity. This is in the Shareholder equity part of the equation.

Assets = Liabilties and Shareholder Equity

I don't know the tax issues this creates. But why don't you just set up a payroll account and pay yourself?