Books don’t match your CPA’s return
When the equity no longer agrees with what was filed.
QuickBooks cleanup · S corporations
QuickBooks cleanup for S corporations.
An S corporation’s books carry things a sole proprietor’s don’t: owner wages on payroll, distributions recorded as distributions, health insurance for 2% shareholders in their wages, shareholder loans kept apart from draws, and a balance sheet that has to agree with the return. When those run together, the return is built on guesses. We untangle them in your own QuickBooks file, on a written fixed-fee scope, and your CPA files.
At review · April statementDoes not tie
Ending balance21,926.57
Cleared balance28,114.99
Difference−6,188.42
The same statement, worked
Same statement · difference found0.00 · not yet finished
Ending balance21,926.57
Cleared balance21,926.57
Difference0.00
What you can check before you sign
- Fixed fee, written first
- Your own QuickBooks file
- No hourly billing
If your file needs our paid diagnostic first, its fee is credited in full against the cleanup. Either way, you get a fixed fee in writing before any work starts.
§ 01 · TL;DR
§ TL;DR
An S corporation cleanup separates owner wages from distributions, records health insurance for more-than-2% shareholders the way the IRS describes, keeps shareholder loans apart from distributions and contributions, and ties the equity section and balance sheet so the Form 1120-S and each shareholder’s Schedule K-1 start from reliable books.
The IRS states that S corporations must pay reasonable compensation to a shareholder-employee before non-wage distributions; how much is reasonable is a decision for you and your CPA. TechBrot keeps the records and does not prepare or file returns.
They took something that felt overwhelming to me as a first-year business owner and made it simple.
What stood out the most was TechBrot Inc’s attention to detail.
Intuit QuickBooks Certification Level 2 and QuickBooks Workforce Certification,
§ 02 · Plainly
What an S corporation’s books have to show.
An S corporation passes its income through to its shareholders, but its owners who work in the business are also its employees. The books have to keep those two relationships apart: wages go through payroll; distributions go to equity; loans between the company and a shareholder go to their own accounts.
When they run together — distributions booked as wages or expenses, personal spending through the business, loans recorded as draws — the return your CPA prepares and each shareholder’s K-1 are built on figures that do not mean what they say.
§ 03 · What the IRS says
Four IRS rules the books have to support.
From irs.gov, read September 28, 2026. These describe what the books must record; the tax positions are your CPA’s.
Reasonable compensation before distributions
The IRS: “S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee.” The amount is for you and your CPA to set; the books have to show it went through payroll.Health insurance for 2% shareholders
Premiums paid for a greater-than-2-percent shareholder-employee are deductible by the S corporation and reportable as wages on the shareholder’s Form W-2 — included in Box 1, not in Boxes 3 and 5.The balance sheet must agree with the books
Form 1120-S instructions: “The balance sheets should agree with the corporation’s books and records.” Schedules L and M-1 are not required only when both total receipts and total assets are under $250,000 (Schedule B, question 11).Shareholder basis
Shareholders file Form 7203 when they claim a loss, receive a non-dividend distribution, dispose of stock or receive a loan repayment from the S corporation — figures that come from distributions and loans recorded correctly in the books.§ 04 · What we find
What an S corporation cleanup turns up.
Distributions booked as wages or expenses
Owner withdrawals recorded as payroll, officer compensation or an expense line, so profit and wages are both wrong.
No owner wages at all
Only distributions, and no payroll for a shareholder who works in the business. We flag it; the compensation decision is yours and your CPA’s.
Owner health insurance outside payroll
Premiums for a 2% shareholder paid as an ordinary expense and never added to W-2 wages.
Loans and draws mixed together
Money a shareholder lent the company, or borrowed from it, recorded as contributions or distributions.
An equity section nobody can read
Retained earnings, contributions and distributions blended into one or two accounts, and not tied to the prior return.
§ 05 · How we clean it up
From tangled equity to books the return can use.
- STEP 1
Get the prior returns
The last filed Form 1120-S and K-1s from your CPA, as the fixed point the books have to tie to. - STEP 2
Separate wages and distributions
Payroll for shareholder-employees recorded as wages; withdrawals recorded as distributions, by shareholder. - STEP 3
Fix health insurance and loans
2% shareholder premiums set up to flow into W-2 wages through payroll; shareholder loans moved to their own accounts with the documents behind them. - STEP 4
Tie the equity and balance sheet
Contributions, distributions and retained earnings reconciled to the prior return’s ending balances. - STEP 5
Hand over
A written summary of every correction for your CPA, and books ready for the next Form 1120-S.
§ 06 · Pricing
What an S corporation cleanup costs.
S corporation cleanups are priced as QuickBooks cleanup (published at $1,200–$15,000+), fixed fee against a written scope that names the years. Payroll for shareholder-employees is payroll management ($150–$800+/mo).
TechBrot is not a CPA firm and does not set reasonable compensation, compute basis, or prepare or file the Form 1120-S or K-1s. We keep the books those are built from.
§ 08 · Questions
Questions about an S corporation’s books.
How much does an S corporation cleanup cost?
It is priced as QuickBooks cleanup, published at $1,200–$15,000+, fixed fee against a written scope that names the years. The exact figure is in the scope before work starts.
Can you tell me what salary to pay myself?
No. Reasonable compensation is a tax decision for you and your CPA. We make sure whatever is decided runs through payroll and is recorded correctly.
What is the difference between a distribution and a shareholder loan?
A distribution is the shareholder taking profit out; a loan is money that has to be repaid. They are recorded in different accounts, and the difference matters to the shareholder’s basis, which your CPA computes.
Do you handle payroll for S corporation owners?
Yes, through payroll management, including setting up 2% shareholder health insurance to flow into W-2 wages.
S corporation books in a tangle?
Get wages, distributions and equity separated.
Tell us what’s wrong with the books. We’ll tell you whether cleanup, catch-up or monthly bookkeeping fits.
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