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I've got an S-corp that (after 2 years) has turned the corner and is generating some decent positive cash flow. I have a meeting with my accountant in a few days, after he recovers from tax season, but I thought I'd post some questions here so as to get a better grip on these things beforehand.

My wife and I are the only shareholders, though we haven't actually issued any stock certificates. Our owner's equity account is showing about $40K in invested capital, and retained earnings is showing about the same amount. I assume that, now that I can begin paying us back, the payments should be against the owner's equity account? Or should I use an "owner's drawing account?" Eventually, that account will empty out....is it a good thing to empty it out completely? I've actually examined several books on the subject, and I can't seem to find clear explanations of what is best.

Assuming we should stick to using the equity account until our investment is paid back, once that is finished, how does one choose between the other ways to pay ourselves (salary vs dividend distribution)? Is there a specified ratio of salary to dividends that is allowed by the IRS?

Assuming my wife and I continue to be the only shareholders, is there any reason to ever issue actual stock certificates? When our accountant drew up the articles of incorporation, he authorized the Board (us) to issue 100,000 shares of common stock of no par value, if that helps.

Thanks in advance.
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